China's Ximalaya abandons US IPO

The company gave no reason for the decision, but it comes at a time when Chinese internet businesses looking to list overseas face regulatory challenges at home and increased scrutiny in the US. Several other start-ups have also reportedly abandoned IPOs, including healthcare big data player Linkdoc, online-to-offline services platform Daojia, e-commerce business Xiaohongshu, and fitness app Keep.

Ride-hailing giant Didi was investigated within days of going public in late June, with the Cyberspace Administration of China saying the company had violated rules on data collection. Within a week, Didi’s market capitalization was at or just below its peak valuation as a private business. Online trucking business Manbang and recruitment platform Boss Zhipin were also targeted.

China subsequently announced that any company that holds data on more than one million domestic users must undergo a security review before listing overseas. US regulators responded by ramping up disclosure requirements for US-listed Chinese companies using variable interest entity (VIE) structures, which give overseas investors exposure to restricted sectors.

In addition, there is the lingering threat of US regulators kicking Chinese companies off the New York bourses if they don’t comply with accounting rules that are currently rejected by Chinese regulators. Guidelines for this process have yet to be released.

In the first half of 2021, 18 PE-backed Chinese companies raised a combined $12.7 billion through US IPOs. There have been no listings since then, according to AVCJ Research. Hong Kong offerings by companies with financial sponsors have also dried up, while the mainland exchanges remain active.

Ximalaya filed for an IPO in May. Other investors identified in the prospectus include Trustbridge Partners, China Internet Investment Fund, Advantech Capital, and Puhua Capital.

It had 250 million average monthly active users (MAUs) in the first quarter of 2021. About 40% access the service via mobile apps and the rest through internet-of-things devices - such as in-care devices and smart home appliances - and other third-party platforms. The company works with over 60 automakers in China to provide in-car audio content through pre-installed devices.

In 2020, mobile app users spent 1.56 trillion minutes listening to Ximalaya content - about 75% of the total time spent on all online audio platforms in China. The average daily time spent per user on the app was 141 minutes. Meanwhile, the company engaged 5.2 million active content creators in 2020. It claims to have exclusive licenses to 71% of China's 100 most popular albums.

Subscriptions account for the largest portion of Ximalaya's revenue, followed by advertising, live streaming, and education services targeting kids under 12. Revenue reached RMB4.05 billion ($626 million) in 2020, up from RMB2.68 billion in 2019. The company's net loss narrowed from RMB773 million in 2019 to RMB605 billion in 2020.

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• Topics
• Greater China
• IPO
• Regulation
• Technology
• China
• TMT
• IPO
• Tencent
• General Atlantic
• Goldman Sachs
• Trustbridge