Chinese Internet giant Tencent Holding Ltd. is planning to spinoff China Reading Ltd, its online publishing and e-book unit to seek an initial public offering in Hong Kong, according to an article published by Tencent's own news platform Tencent Technology.
The news follows media reports surfaced last week that China Reading might be aiming for an IPO to raise US$800 million in total.
In 2015, Tencent set up China Reading after acquiring the largest Chinese online publishing platform at that time Cloudary Corporation, also known as Shanda Cloudary, the literature unit of Shanda Group.
Tencent merged it with its own Tencent Literature unit. The former CEO of Tencent Literature, Wu Wenhui, was appointed as the CEO of the new platform, of which Tencent owns a 66.4% stake.
China Reading currently has over four million writers publishing over ten million novels for 600 million readers, the company claims.
Cloudary Corporation was founded in 2008 and obtained US$110 million in funding from Goldman Sachs and Temasek Holdings Ltd. The company previously tried four times to pursue an IPO in the U.S. but was unsuccessful. The last time it attempted at an IPO was in 2014, but failed again becauae of low valuations and the departure of the company's CEO.
"We are a company which Tencent has share of, but China Reading itself is an independent company. We will issue IPO as an independent company," said a Cloudary executive during a China Reading conference last year. But at that time, he did not specify the time and location.
Tencent announced its 2016 financial results two days ago. The company's revenues reached RMB151 billion (US$29 billion), up 48% year-on-year. Its operating profit increased 38% year-on-year to RMB56 billion (US$8 billion).