Chinese gaming giant NetEase raised $2.7 billion IPO in Hong Kong

NetEase — a Chinese Internet giant, Tencent after the second-largest gaming company in China. Almost 79% of revenue comes from online game but the company is trying to grow in other areas, such as education and streaming music. NetEase held a secondary listing in Hong Kong, the proceeds of which will be partially used to accelerate international expansion.

NetEase is widely known in China, but the brand is not really recognizable outside the home market. Recently the company conducted a secondary listing in Hong Kong, the proceeds from which were partially used to accelerate international expansion. During the IPO, the quotes increased by 8% thanks to the interest of investors to a major placement of shares after the lifting of quarantine measures. Only attracted NetEase in Hong Kong $2.7 billion that have become one of the largest placements this year.

NetEase Part of the money raised through listing in Hong Kong, will focus on “strategies and opportunities of globalization”, the company said. Despite the fact that international expansion has just begun, NetEase is committed to speed it up.

“Encouraged by the success in such foreign markets as Japan, we are confident and determined to expand its presence in the international market,” said NetEase CEO William Ding in the income statement for the first quarter.

Until now, NetEase has been successful in Japan thanks to games like “Knives Out”. She also has focused on partnerships with international brands such as Warner Bros. for the new game “Harry Potter: the Magic of Awakened”.

In 2019, total revenue amounted to 7.4 billion dollars. In the first quarter of 2019, the net proceeds NetEase amounted to 17.1 billion yuan (2.4 billion dollars), an increase of 18.3% compared to the same period last year. Of these, nearly 79% were for online games, both for PC and for mobile devices.

Among the popular games companAI — series “Fantasy Westward Journey” and “LifeAfter”.

the Second major category of income is what the company calls “innovative business and other types of net profit”, which includes streaming music service, a video streaming platform and e-Commerce services. This unit in March accounted for over 17% of revenue. NetEase did not disclose figures for individual products.

NetEase also owns an educational platform Youdao, which accounts for slightly more than 3% of revenue. But this division is growing rapidly. Youdao revenue in the first quarter was 541,4 million yuan (76.5 million dollars), which is 139,8 percent more than in the same period of 2019.

Exit NetEase on the Hong Kong stock exchange held in the framework of a secondary public offering (SPO). Initial public offering (IPO) held in the USA on the NASDAQ in 2000. Listing in Hong Kong amid growing tensions between the US and China, which seems to threaten some Asian companies listed on wall street. The U.S. Senate recently unanimously supported a bill that may force the Chinese to leave the giants on the American stock exchange. Under the bill, foreign companies will require transparency for auditing and evidence that they do not belong to governments and not controlled by them.