Chinese cloud storage company Kingsoft Cloud is pushing ahead with its plans to list its shares on the NASDAQ despite the added scrutiny by regulators on Chinese firms listed in the US. The decision to launch its initial public offering in the US also comes as US President Donald Trump continues to express his hostilities against China and US-listed Chinese firms.
Kingsoft Cloud, the cloud storage unit of Kingsoft Corporation, is planning to list up to 25 million American depository shares on the NASDAQ, which it reportedly plans to price between $16 and $18 per share. At the higher end of the range, the company will be able to raise more than $450 million through the IPO.
The company could potentially exceed its target if it takes its overallotment option, which will allow it to issue an additional 3.75 million shares. Kingsoft Cloud had already conducted its investor roadshow last month and sources say t'1hat they are pushing ahead with the IPO as scheduled. The IPO will be underwritten by UBS, Credit Suisse, JPMorgan, and China International Capital Corporation.
Based on its given price range, Kingsoft Cloud has an estimated market capitalization of around $3.8 billion. Company shareholders Xiaomi and Kingsoft Group had previously announced that they would be buying up to $50 million worth of its shares if it pushes ahead with its IPO in the US. French asset management firm Carmignac Gestion had also expressed interest in buying up to $50 million worth of the company's US stocks.
Industry experts had pointed out that the US continues to be an attractive location for IPOs due to its better liquidity for smaller companies. However, Kingsoft's timing is questionable given the country's heightened scrutiny on Chinese firms and the rising tensions between China and the United States, which had started to exchange blame over the origin of the global coronavirus pandemic.
The already elevated tension was recently exacerbated when Trump had threatened to ban the transfer of US federal savings to a fund that included Chinese equities. Trump claimed that investing the country's money in the fund, which allocates only 5 percent of investments towards Chinese stocks, posed a national security risk.
Apart from the tensions, analysts have pointed out that it will be challenging for Kingsoft Cloud to convince US investors to buy its stocks. Investors in the country have remained skeptical against Chinese firms following the publicized financial misconduct of Chinese coffee chain operator Luckin Coffee. Last month, Luckin Coffee had admitted that some of its employees had falsified its financial statements.
