Lei Juns Kingsoft Office Moves Closer To IPO On Shanghais Sci-tech Board

Hong Kong-listed Chinese software group Beijing Kingsoft Office Software is moving closer to an initial public offering (IPO) of its office software unit on the Nasdaq-style high-tech board in Shanghai, making it the third listed company controlled by Xiaomi founder Lei Jun.

An official statement released by the Shanghai Stock Exchange said Kingsoft Office, which filed its IPO prospectus in May to raise 2.05 billion yuan (about $300 million), is now awaiting the financial decision of the Shanghai bourse.

The Shanghai exchange said it has completed its second round of questioning about the proposed listing of Kingsoft Office. If the listing fructifies, it will reverse a failed attempt made by the Chinese company to float three years ago.

Kingsoft is among the high-profile companies planning to list on the new board, joining other hopefuls including chip sector firm Advanced Micro-Fabrication Equipment Inc.

In the two months since the application period began, 120 firms – many in industries such as semiconductors, artificial intelligence, and biotech – have sought permission to list, aiming to raise a combined $16 billion.

In its prospectus, Microsoft’s challenger in China said it seeks to raise around $300 million in the IPO by offering 101 million shares, or 21.91 per cent of the company’s total.

Kingsoft said it will use the proceeds from the IPO to upgrade its WPS Office software, a popular free alternative to Microsoft’s Offices suite.

WPS Office is widely used by Chinese government bodies and some of China’s internet giants, the company said. The IPO filing showed that Alibaba is Kingsoft Office’s top client, paying 157 million yuan in subscriptions last year.

The fresh capital will also be used to fund fundamental research in artificial intelligence and cloud-based office services.

Lei, who co-founded Kingsoft 12 years before his foray into the smartphone industry, has been the company’s board chairman since 2011. As of the end of May, Lei held 15.31 per cent of Kingsoft with an overriding 25.7 per cent voting right.

In 2018, Kingsoft posted sales revenue of 1.13 billion yuan, a 50 per cent rise from 2017’s 753 million yuan. Its net profit grew 45 per cent year on year to 311 million yuan in 2018 with 86.7 per cent gross margin.