Music streaming platform Cloud Village has relaunched its initial public offering (IPO) in Hong Kong, months after parent company NetEase suspended its initial listing plans amid Beijing’s sweeping regulatory crackdown on the Chinese private sector.
NetEase said Cloud Village submitted its IPO application to the Hong Kong Stock Exchange for approval on Tuesday.
According to its quotation app, Cloud Village has recorded losses over the past three years, with a full-year net loss widening to CNY 3 billion ($ 470 million) in 2020 from $ 2 billion. of CNY in 2019.
Losses expected until 2023
NetEase in a stock file said it expects Cloud Village’s net loss for 2021 “to register a substantial increase” from a year ago.
The parent company added that it expects Cloud Village to remain in deficit until the end of 2023.
“It (Cloud Village) has focused on growing its user base by investing in its brand and high quality content, rather than looking for immediate financial returns or profitability, in order to lay a solid foundation. for long-term development, ”NetEase said. .
Strong revenue growth
Cloud Village’s revenue has grown significantly over the past three years. Its 2020 revenue was CNY 4.89 billion, more than double that of 2019.
The company classified its revenues into two categories, namely “online music services” and “social and other entertainment services”, the former contributing more than 53% of total revenue in 2020.
Cloud Village has reported intense competition in the music streaming industry, reliance on third-party licenses, regulatory risks, and the deterioration of Sino-US relations as potential risks to the business, among others.
Use of funds
The company said it intends to use its IPO funds to expand its library of music content, for investments in research and development initiatives related to artificial intelligence, to machine learning and data analysis, mergers and acquisitions and general corporate purposes.
NetEase will remain the sole shareholder with a direct stake of more than 30% in Cloud Village after the IPO, according to the app.
Cloud Village did not disclose the size of the deal or the time of the IPO. Reuters reported, citing internal sources, that Cloud Village aims to raise $ 500 million by the end of the year.
Read more: The IPO of the music streaming service Cloud Village in Hong Kong
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