China gay dating app Blued raises $85m in US IPO

The company sold 5.3 million American Depositary Shares (ADS) at $16 apiece, representing the mid-point of the indicative range. Its stock opened at $27.90 on July 9 and peaked at $28 before falling back to close at $25.99, a 62% premium to the IPO price.

Shunwei Capital is the largest external shareholder with 10.4%, followed by CDH Investments on 8%. Golden Bull Capital, Crystal Stream Capital, NewQuest Capital Partners, and Vision Knight Capital have smaller stakes. BlueCity's most recent funding round was a $100 million Series D led by CDH in 2018.

Founded in 2000, the company has a registered user base of more than 49 million, according to a prospectus. Average monthly active users (MAUs) reached six million in the three months ended March, up from 4.1 million for the same period in 2018. Average MAUs were six times those of the next largest player in the online dating market last year, according to Frost & Sullivan. Average daily active users (DAUs) were nearly seven times larger.

BlueCity has successfully expanded into overseas markets, becoming the number one online LGBTQ community in India, Korea, Thailand and Vietnam by average MAUs in 2019. Overseas users account for about half of overall MAUs. However, the company still makes most of its money in China. Overseas MAUs contributed just 9.9% of total revenue in the three months ended March.

In addition to its core dating feature, BlueCity has a live-streaming service and a surrogacy matchmaking service Bluedbaby. There is also a dedicated healthcare service known as He Health.

In 2019, live streaming accounted for 88.5% of revenue. The rest came from membership services and advertising. BlueCity's revenue increased by 51.4% year-on-year to RMB758.9 million ($107.2 million) in 2019, while its net loss narrowed from RMB144.5 million to RMB52.9 million.

It has been suggested that BlueCity's IPO might revive investor interest in China's pink economy – a catch-all term for commercial activity involving the LGBTQ community – which has been muted in recent years. According to David Wei, founding partner at Vision Knight, LGTBQ represents an attractive niche in an otherwise saturated market.

“Internet traffic stopped growing as quickly after 2016 and Alibaba, Tencent, Baidu and ByteDance accounted for more than 75% of it. There is few investment opportunities in the pure internet and the pure TMT [technology, media and telecom] sector," he says. “Blued is the only internet company we invested after 2016. LGBTQ is a field the giants haven’t yet paid attention to,” Wei told AVCJ.

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• Topics
• Greater China
• Consumer
• Technology
• IPO
• China
• CDH Investments Management
• Shunwei Capital Partners
• Vision Knight Capital
• NewQuest Capital Partners
• TMT