Chinese security software maker Cheetah Mobile files for U.S. IPO

April 2 Wed Apr 2, 2014 6:06pm EDT

April 2 (Reuters) - Security software maker Cheetah Mobile Inc, a unit of Chinese software company Kingsoft Corp Ltd , filed with U.S. regulators on Wednesday to raise about $300 million in an initial public offering of American Depositary Shares.

Beijing-based Cheetah, formerly known as Kingsoft Internet Software Holdings Ltd, told the U.S Securities and Exchange Commission in a preliminary prospectus that Morgan Stanley, J.P.Morgan, Credit Suisse and Macquarie Capital were underwriting the IPO. (r.reuters.com/dyr28v)

The filing did not reveal how many shares the company planned to sell or their expected price.

Kingsoft Corp, which makes entertainment, internet security and office software, applied to the Hong Kong Stock Exchange In January for permission to spin off its security software business.

Kingsoft Corp, which holds about 54 percent of Cheetah, has proposed a dual-class structure that would allow it to retain control and continue to consolidate the unit's financial results after the IPO.

The U.S. market affords Chinese companies options not available in Hong Kong, such as dual-class structures and the ability to list without having turned a profit. It also offers far more liquidity than the newly reopened mainland China IPO market.

Cheetah, like a number of other Chinese companies listing in the United States, relies on a little-tested legal structure called "variable interest entity" (VIE) that gives an investor economic interest but no ownership.

The structure helps companies bypass Chinese government bans on foreign ownership in some business sectors.

Cheetah intends to list its common stock on the New York Stock Exchange but did not specify the symbol under which it would list.

Net proceeds from the offering would be used to strengthen marketing and for other general corporate purposes, the company said in the filing.

The company reported net income of $10.24 million on revenue of $123.87 million in 2013.

The amount of money a company says it plans to raise in its first IPO filings is used to calculate registration fees. The final size of the IPO could be different. (Reporting by Avik Das in Bangalore; Editing by Don Sebastian)

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