VC-backed Xunlei jumps 24% on debut after $88m IPO

The company sold 7.32 American Depository Shares (ADS) at $12 apiece, above the indicative range of $9-11, according to a filing. After opening at $14.21 on Tuesday, the stock peaked at $15.55 before settling back to $14.90. The size of the offering could swell to as much as $101 million if underwriters exercise the full over-allotment option.

Xiaomi Ventures, an investment arm of Chinese mobile phone manufacturer Xiaomi, increased its stake in Xunlei by triggering an anti-dilution clause and agreeing to acquire shares owned by investors including Ceyuan Ventures for around $123 million. Xiaomi, which invested $200 million in Xunlei earlier this year, now owns 29.3% of the company, up from 27.2% before the offering.

Ceyuan is the only VC investor to make a partial exit from Xunlei, its holding falling from 5.4% to 2.2%. King Venture Holdings - a subsidiary of software developer Kingsoft Holdings, which invested $90 million at the same time as Xiaomi Ventures - owns 11.7% of the company, while IDG Capital Partners has 8.1%. The number of shares held by each investor has increased due to anti-dilution clauses.

Morningside Technologies has an 11.8% interest. An earlier filing indicated that Skyline Global Holdings, a subsidiary of Primavera Capital would own 5.4% of Xunlei post-offering.

Xunlei, which pulled out of a NASDAQ offering two-and-a-half years ago due to market volatility, 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 and Oppenheimer & Co. managed the offering.

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