China’s largest question-and-answer platform Zhihu has set terms for its planned IPO on the New York Stock Exchange, becoming the latest Chinese firm this year to tap into the U.S. capital markets despite tightening scrutiny by Washington.
Beijing-based Zhihu plans to issue 55 million American depositary shares (ADS) priced between $9.50 and $11.50 each, according to an amended prospectus submitted to the U.S. Securities and Exchange Commission on Friday.
The company could raise as much as $632.5 million if the ADSs are priced at the top of the range. An overallotment option will allow underwriters to purchase up to another 8.25 million ADSs within 30 days if demand is strong. The company also plans to raise an additional $250 million in a concurrent private placement to investors including Alibaba, JD.com, Tencent and Lilith Games, according to the IPO prospectus.
“We intend to use the net proceeds from this offering and the concurrent private placements for the development of product and service, marketing and user growth, research and development and generate corporate purposes, including potential strategic investments and acquisitions,” Zhihu said in the prospectus.
Eleven-year-old Zhihu, which bills itself as the largest Q&A-style platform in China both in terms of monthly active users and revenue, has been making efforts to become profitable including expanding into paid membership services from free, advertising-driven ones. The company saw its net loss shrink to 337.5 million yuan ($52 million) last year from 824.5 million yuan in 2019. Its paid members jumped to 2.36 million users at the end of 2020, compared with 574,000 in 2019.
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