Tencent unit China Literature launches up to US$1.1bil HK IPO

HONG KONG: China Literature Ltd, China’s largest online publishing and e-book company, launched an initial public offering for up to US$1.1bil, seeking funds for acquisitions and to expand its digital publishing business.

Tencent Holdings Ltd controls China Literature with a 62% stake. Private equity firm Carlyle Group LP owns 12.2% while Trustbridge Partners, a private equity firm founded by Shujun Li, the former CFO of Shanda Interactive, holds 6%.

According to a term sheet for the IPO seen by Reuters, China Literature and some of its shareholders are offering 151.37 million shares in an indicative range of HK$48 to HK$55 each.

The new shares will be equivalent to 16.7% of China Literature’s enlarged share capital, with its market capitalization expected to be up to US$6.4bil.

Tencent and China Literature did not immediately reply to a Reuters request for comment on the IPO terms.

The China Literature IPO is the latest in a series of high-profile technology listings in Hong Kong.

Last month, ZhongAn Online Property & Casualty Insurance Co’s hit the market with a US$1.5bil IPO.

And in coming days, Razer Inc, a gaming hardware maker backed by Intel Corp and Hong Kong billionaire Li Ka-shing, is set to launch an IPO for up to US$600mil.

China Literature has a business akin to Amazon.com Inc’s Kindle Store, operating a platform with 9.6 million literary works from 6.4 million authors.

Bank of America Merrill Lynch, Credit Suisse and Morgan Stanley were hired as sponsors for the IPO, with China International Capital Corp Ltd (CICC) and JPMorgan also working as joint global coordinators.