IDG commits $24m to Kingsoft’s cloud computing unit

The Hong Kong-listed software developer's contribution will be $28.6 million, according to a filing, taking its holding from 52.10% to 52.29%. IDG will take a 3.98% stake in the business. Both groups are acquiring Series B preferred shares in Kingsoft Cloud alongside an undisclosed number of existing shareholders and management.

Kingsoft Cloud provides cloud-based hosting, storage and database services. It posted a net profit of RMB129.03 million ($20.7 million) in 2014 - having formerly launched its services early in the year - compared to a loss of RMB61 million in 2013. Chinese smart phone maker Xiaomi acquired a 10% stake in the then nascent business for $1.82 million in December 2012.

Kingsoft Cloud is one of several subsidiaries that Kingsoft spun out so they could operate with greater independence. The three major business arms are enterprise software division Kingsoft Office Software, security software provider Kingsoft Internet Security and entertainment software developer Kingsoft Entertainment.

This restructuring was led by Lei Jun, a co-founder and former CEO of Kingsoft who now serves as its chairman and non-executive director. Lei has set up a string of start-ups, including Xiaomi, and also co-founded Shunwei Capital Partners. Xiaomi and Shunwei have invested in several Kingsoft-related businesses.

A host of China-based cloud computing companies have received VC backing, including Upyun, UCloud, AVOS Cloud, QingCloud, KeyTone Cloud, Gotye, Gllue and InnoLight. IDG is an investor in AVOS Cloud, a mobile back-end as a service (BaaS) provider, having provided an undisclosed sum in Series A funding last September.

The VC firm closed its latest fund in June 2014 at $586 million.

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• Topics
• Venture
• Greater China
• Technology
• Early-stage
• Venture
• China
• Technology
• IDG Capital Partners