IDG-backed Tian Ge targets $208m HK IPO

The company has signed up 10 cornerstone investors who between them will cover approximately HK$618.8 million of the offering, acccording to a regulatory filing. They include Qihoo 360, a US-listed Chinese antivirus software provider, which will put in up to $5 million for a stake of around 0.60% in Tian Ge.

The proceeds of the offering will be used for research and development and expanding Tian Ge's mobile video and mobile gaming businesses, as well as for marketing and potential acquisitions.

Citing iResearch, the company claims to have a 33.9% share of China's live social video community market by user spending in 2013, compared to 23.1% for its closest competitor. Tian Ge's video streaming model allows multiple users to stream content simultaneously into the same real-time video room, facilitating social networking activity. Virtual currency is available so users can buy virtual gifts for themselves or others.

The platform had 10.8 million monthly active users in 2013, up from 8 million the previous year, while average monthly paying users totaled 270,000, compared to 209,000 in 2012. Tian Ge recently entered the mobile games market and plans to release 6-8 titles in 2014.

Revenue came to RMB548.2 million ($87.9 million) in 2013, up from RMB455.8 million in 2012. However, the company's net losses widened during the period, rising from RMB27.2 million in 2012 to RMB92.6 million last year.

IDG invested $5.1 million in the company in 2008 via the IDG-Accel China Growth Fund II and currently holds a 21.9% stake. Sina committed $10 million the following year and owns 32.9%. They will be diluted to 16.4% and 24.7%, respectively, post-offering.

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