SAN FRANCISCO, March 14 Twitter-like messaging
service Weibo Corp filed on Friday to raise $500 million via a
U.S. initial public offering, as Chinese companies flock to the
American market in record numbers to take advantage of soaring
Weibo, owned by Sina Corp, becomes the latest
Chinese Internet giant to tap U.S. markets, following on the
heels of search service Baidu and its own corporate parent.
But underscoring challenges facing Internet firms operating
in a heavily censored and tightly controlled media environment,
Weibo warned investors in its IPO filing about uncertainty
arising from Chinese government regulation.
It highlighted in particular a regulation that came into
effect in September, under which Internet users who knowingly
make or share information considered defamatory or false could
face up to three years' jail time in China.
"The implementation of this newly promulgated judicial
interpretation may have a significant and adverse effect on the
traffic of our platform and discourage the creation of user
generated content," the company said in its filing.
It also warned about potential government intervention in
its encryption tools and software - used to prevent spying while
safeguarding the privacy of users and their posts.
Weibo said that Beijing requires all "cipher code" products
to be registered with the government, though it was unclear
whether this applied to social media encryption.
"Because these regulations do not specify what constitutes a
cipher code product, we are unsure as to whether or how they
apply to us and the encryption software we utilize," the company
said in its prospectus.
COME ONE, COME ALL
Still, U.S. investors have long shown an appetite for
Chinese companies' stock, hoping to share in some of the spoils
of the world's fastest-growing major economy.
U.S. markets may see more IPOs from Chinese corporations in
2014 than in any year since 2010.
Weibo's revenues leapt almost three-fold to $188.3 million
in 2013, from $65.9 million in 2012. And its net loss shrank to
$38.1 million in 2013 from $102.5 million the previous year.
But its user growth is at risk of tailing off after three
years of explosive expansion, as newer messaging apps such as
Tencent Holdings Ltd's WeChat draw users away.
In January, an official government-backed Internet
organization reported that user numbers for Chinese microblogs,
including Sina Weibo, had fallen 9 percent in 2013.
However, Weibo said the number of its daily users had risen
36 percent to 61.4 million as of the end of December, from the
same time a year before.
Weibo hired Goldman Sachs and Credit Suisse to manage its
U.S. debut, which it said would boost brand recognition and help
Its proposed $500 million target is an estimate worked out
solely for the purposes of calculating registration fees.