WORLD Tencent-backed search firm Sogou jumps 10 percent in US market debut

WORLD

Tencent-backed search firm Sogou jumps 10 percent in US market debut

Reuters Staff | Reuters

04:01, November 10, 2017

Image result for Sogou Reuters

China-based Sogou Inc’s (SOGO.N) shares rose more than 10 percent in their US market debut, as investors expect a massive base of Chinese smartphone users to help the Tencent-backed search engine company narrow the gap with market leader Baidu.

Shares of Sogou rose as much as 13.1 percent on the New York Stock Exchange on Thursday morning, valuing the Beijing-based firm at $5.76 billion.

Sogou’s initial public offering was priced at $13 per American depository share, at the high end of the expected $11 to $13 range, and raised $585 million.

Its IPO follows Wednesday’s hugely successful Hong Kong IPO of China Literature Ltd (0772.HK), the e-book unit of Chinese internet and media giant Tencent Holdings Ltd (0700.HK).

It also represents the latest in a recent flurry of New York listings by Asian companies, joining other Chinese firms as well as startups from Singapore and Taiwan in tapping US equity markets for capital this year.

Founded in 2005 by internet firm Sohu.com Inc (SOHU.O), Sogou runs China’s second largest search engine by mobile queries, rivaling Baidu Inc (BIDU.O), and Alibaba’s (BABA.N) UCWeb. It generates revenue mainly through search advertising services.

Sogou expects the size of the domestic online search industry will balloon to $30.7 billion in 2021 from $11.5 billion in 2016, driven by the hundreds of millions of Chinese who browse the internet on their mobile phones. Sogou says this massive user base represents a largely untapped opportunity to make money through ads.

Sogou, the default search service on Tencent's Mobile QQ browser and qq.com, has about 483 million mobile monthly active users, according to its IPO paperwork bit.ly/2jdluwP with U.S. securities regulators.

Baidu, in contrast, had some 665 million monthly active mobile search users in December 2016, the last period for which it disclosed the metric.

Sogou’s net income climbed 47 percent to $66.7 million in the nine months ended Sept. 30. Its revenue jumped 29 percent to $630.6 million in that period.

Sohu will remain Sogou’s controlling shareholder after the IPO, while Tencent will own a 38.7 percent stake.

Tencent’s other notable investments include stakes in ride service Lyft, electric car maker Tesla Inc (TSLA.O) and most recently a substantial investment Snapchat owner Snap Inc (SNAP.N).

JPMorgan, Credit Suisse, Goldman Sachs and CICC were among the underwriters to Sogou’s IPO.


Related Stories

Terms of Service & Privacy Policy

We have updated our privacy policy to comply with the latest laws and regulations. The updated policy explains the mechanism of how we collect and treat your personal data. You can learn more about the rights you have by reading our terms of service. Please read them carefully. By clicking AGREE, you indicate that you have read and agreed to our privacy policies

Agree and continue