Venture firms set for windfall from Xunlei IPO
Venture capital investors Morningside Technology Investments, IDG Technology Venture Investment and Ceyuan Funds are on course for profitable exits from Xunlei.com as the Chinese software company filed for a proposed IPO that could raise up to $200 million.
The company plans to use the proceeds to establish a customer service center and cloud computing data centers, acquire digital media and gaming content, and invest in technology and product development. It also wants to retain and attract employees by providing equity incentives.
Xunlei recorded a net profit of $25.7 million in 2010, with revenues primarily driven by online advertising and cloud-based subscription services. Yet the company is best known for its download software that allows users to manage and share digital content. The proliferation of illegal file-sharing and copyright infringement led to it being sued in 2008 by six Hollywood studios and CCTV, China's state broadcaster.
The principal shareholder is Vantage Point Global, a company wholly owned by Xunlei founder Sean Zou, with 27.5%. Morningside, IDG and Ceyuan hold 24.6%, 12.2% and 11.3%, respectively. Minor shareholders include Google and, reportedly, Rupert and Wendi Murdoch.
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