36kr, China's TechCrunch, Files for IPO Amid Volatility in the US Stock Market

Rebbeca Ren

posted on October 4, 2019 10:24 am

On September 30, 36Kr Holdings Inc, the Chinese tech news and data portal, filed to raise up to $100 million in an initial public offering on Nasdaq. The filing comes in the wake of a Trump administration official's denial of a report out late last week that the U.S. was considering banning Chinese companies from listing in the U.S.

Similar to TechCrunch, 36Kr, the Beijing-based media company provides content about the technology industry and services for businesses such as consulting, integrated marketing and offline activities.

According to the filing, the tech positioned itself as a prominent brand and a pioneering platform dedicated to serving New Economy participants in China. It raised USD 24 million in its most recent funding round September, when it sold shares to investors including Nikkei Inc., which owns the Financial Times.

Founded by Liu Chengcheng in 2010, 36Kr is already one of the top tech media in China. The monthly average PV reached 347.7 million, the piece of content hit 108,000, and the enterprises in its databases exceeded 800,000, the filling presented.

As early as July 2016, 36Kr made an announcement through its internal mail, saying that the media business, which was considered as the most critical sector of the company, would be spun off and operate independently. Feng Dagang was assigned as the head of media business.

Currently, Feng works as Co-chairman of the Board of Directors and CEO of the tech media. He has over 10 years of managerial experience and more than 15 decades of expertise in media and investment sectors. Before joining 36Kr, Feng served as a senior investment manager at Matrix Partners China from 2012 to 2016, where he primarily focused on investments in the Internet and technology sectors.

At present, Feng holds 17.5% of the shares, while Liu Chengcheng, the founder, holds 6.2%.

API (Hong Kong) Investment Limited, a subsidiary of Ant Financial, holds 16.1% of the shares. Ant Financial is the fintech affiliate of Chinese e-commerce giant Alibaba.

As the New Economy is rapidly transforming businesses through cutting-edge technology and innovative business models, the tech media started its business with high-quality New Economy-focused content offerings. Leveraging traffic brought by high-quality content, it has expanded the offerings to business services, including online advertising services, value-added enterprise services, and subscription services.

The company's future business, financial conditions, and results of operations will largely depend on the development of China's New Economy and the growth of the number of New Economy participants, said the prospectus.

In 2018, the company recorded a net income of CNY 40.5 million (USD 5.9 million) on revenue of CNY 299.1 million (USD 43.6 million), compared with income of CNY 7.9 million on revenue of RMB120.5 million, in 2017. Despite recording profits in both 2017 and 2018, 36Kr lost CNY 45.5 million, or USD 6.6 million, in the six months ended June 30.

Credit Suisse and Chinese investment bank CICC are underwriters of the offering.

The filing comes amid volatility in the U.S. IPO market. Nearly half of all companies to go public in 2019 are trading below their offer prices. The ride-hailing giants, Uber and Lyft, which stumbled out of the gate and have struggled to regain their footing. On September 30, WeWork announced it's indefinitely postponing its public offering as its new co-CEOs "focus on our core business." The announcement sent WeWork bonds to record lows.