VC-backed Xunlei files for US IPO

The company has filed to sell shares but has yet to set terms for the offering. The move comes after software developer Kingsoft Corporation and mobile phone manufacturer Xiaomi invested $90 million and $200 million, respectively, in Xunlei.

King Venture Holdings, a wholly-owned unit of Kingsoft holds a 12.2% interest in the company while Xiaomi Ventures has 27.2%. Other disclosed investors include Morningside Technologies with 14.5%, IDG Capital Partners with 9.7%, Ceyuan Ventures with 5.4% and Primavera Capital with 5.7%.

According to AVCJ Research, IDG seeded Xunlei in 2003 and Morningside entered in the second round two years later. Both firms re-upped for the $15 million Series C in 2006, joined by Ceyuan and Fidelity Growth Partners Asia. Google committed $5 million to Xunlei the following year.

A number of investors picked up stakes in 2011 ahead of the planned IPO, including China Renaissance Capital Investment, Sohu and a vehicle owned by Rupert Murdoch and his then wife Wendi.

Primavera committed approximately $50 million in 2012. In April of this year, the company completed a Series E round of funding - which saw the entry of Xiaomi and Kingsoft, while IDG and Morningside re-upped - and repurchased shares from a number of investors. Fidelity Asia and Primavera were among those that made full or partial exits.

Xunlei claims to be the 12th largest internet company in China by user base. Its most popular - and free - product is Xunlei Accelerator, a peer-to-peer software tool with approximately 142 million monthly users as of March 2014 and a market share of 81.4%. The company also offers cloud acceleration subscription services, an online video streaming platform, pay-per-view media services and online games.

Xunlei was sued by six Hollywood studios and Chinese state broadcaster CCTV in 2008 for copyright infringement arising from illegal file-sharing. The company was subject to 72 lawsuits in China in 2013, down from 114 the previous year. Approximately 96.4% of the lawsuits faced since 2011 were rejected by the courts. 

Revenues are primarily generated through cloud subscription services, online advertising and other internet value-added services.

Xunlei reported revenue of $180.2 million in 2013, up from $148.2 million the previous year and $87.5 million in 2011. The company became profitable in 2012 and posted net income of $10.4 million in 2013.

J.P. Morgan, Citigroup, Stifel and Oppenheimer & Co. are managing the offering.

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• Topics
• Greater China
• Exits
• Technology
• Consumer
• Venture
• Venture
• Exit
• IPO
• TMT
• China
• Morningside Technologies
• IDG Capital Partners
• Ceyuan Funds
• Primavera