Kingsoft commits $90m to VC-backed file-sharing service Xunlei
Chinese software developer Kingsoft Corporation will invest $90 million in Xunlei, a file-sharing service backed by a string of VC firms including Morningside Technologies, IDG Ventures and Ceyuan Ventures.
According to a regulatory filing, Hong Kong-listed Kingsoft will subscribe to approximately 39 million preferred shares in Xunlei at $2.82 apiece, giving it a 9.98% stake in the company.
Xunlei, which pulled out of a $200 million NASDAQ IPO in late 2011 due to market volatility, generates most of its revenue from online advertising and cloud-based subscription services. Yet it is best known for its download software that allows users to manage and share digital content.
The company was sued by six Hollywood studios and Chinese state broadcaster CCTV in 2008 for copyright infringement arising from illegal file-sharing.
At the time of the planned IPO, Morningside, IDG and Ceyuan owned 24.6%, 12.2% and 11.3%, respectively, of the business. Minor shareholders included Google, Rupert Murdoch's News Corporation. IDG seeded Xunlei in 2003 and Morningside entered in the second round two years later. Both firms re-upped for the $15 million Series C in 2006, joined by Ceyuan and Fidelity Growth Partners Asia.
China Renaissance Capital Investment picked up a stake in the company in early 2011 and Primavera Capital Group put in $50 million the following year.
Chinese mobile phone brand Xiaomi, which was set up by Lei Jun, who also co-founded Kingsoft and currently serves as the company's chairman, invested $300 million in Xunlei earlier this year. This was said to be in support of an IPO later in 2014.
Separately, Cheetah Mobile - formerly Kingsoft's internet security software division, which spun out in 2009 - has filed to list on the New York Stock Exchange. Kingsoft owns 54.1% of the business, while Tencent Holdings and Matrix Partners hold 18% and 6.3%, respectively.
Cheetah Mobile was created as part of a restructuring of Kingsoft, which saw its three major subsidiaries - covering enterprise software, security software and gaming - spun out so they could operate with greater independence.
A corporate VC unit of Xiaomi is also invested in the gaming business, Westhouse Group, and a smaller subsidiary, cloud computing provider Kingsoft Cloud. Morningside, GGV Capital and Shunwei Ventures, a VC firm set up by Lei, committed $50 million to the enterprise software division, Kingsoft Office Software, last November.
Cheetah Mobile had 329.5 million monthly active users across all of its applications as of December 2013. Its primary businesses include a junk file clearing and privacy protection service, a computer battery optimization tool, an anti-virus software solution and a safe internet browser.
The company reported a net income of RMB62 million ($10.2 million) in 2013, up from RMB9.8 million the previous year. Revenues rose from RMB287.9 million to RMB749.9 million over the same period.
More on Venture
Latest News
Asian GPs slow implementation of ESG policies - survey
Asia-based private equity firms are assigning more dedicated resources to environment, social, and governance (ESG) programmes, but policy changes have slowed in the past 12 months, in part due to concerns raised internally and by LPs, according to a...
Singapore fintech start-up LXA gets $10m seed round
New Enterprise Associates (NEA) has led a USD 10m seed round for Singapore’s LXA, a financial technology start-up launched by a former Asia senior executive at The Blackstone Group.
India's InCred announces $60m round, claims unicorn status
Indian non-bank lender InCred Financial Services said it has received INR 5bn (USD 60m) at a valuation of at least USD 1bn from unnamed investors including “a global private equity fund.”
Insight leads $50m round for Australia's Roller
Insight Partners has led a USD 50m round for Australia’s Roller, a venue management software provider specializing in family fun parks.