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Home Business Huya Offers Second Offering of ADSs, Shares Drop In Response

Business Market & Companies

Huya Offers Second Offering of ADSs, Shares Drop In Response

by H.B. Duran April 11, 2019

written by H.B. Duran April 11, 2019

Shares for Chinese video livestreaming platform Huya dropped 3% to $25.23 by markets close on Monday and continue decreasing today (1 pm ET).

Huya announced a secondary offering of American depositary shares (ADSs), with proceeds going toward content, esports partners, technology, and other purposes.

Despite Monday’s drop, Huya shares have gained 68% in the year to date.

Chinese video streaming giant Huya

announced plans to launch a secondary offering of American depositary shares (ADSs). Following the announcement Monday, Huya shares dropped 5% in premarket trade.

Huya’s stock prices took a slight tumble this week. The video streaming platform plans to offer 13.6M ADSs. In addition, a selling shareholder is offering 4.8M ADSs.

Proceeds from this new ADSs offering will be used to invest in a number of areas including content, esports partners, strengthening technologies, supporting overseas expansion, and for “general corporate purposes.”

Related Article: ESL Announces Partnerships With Chinese Streaming Services Huya and Huomao

The shares closed Friday at $25.99 USD, per Market Watch. Despite Monday’s setback, Huya shares have gained 68% and the S&P 500 has gained 15% in the year to date. Huya raised $462M in a series B round led by Tencent in March 2018. In early 2018 the news was made public that Huya applied for an IPO on the Nasdaq, with plans to raise $500M. When the company went public on May 11, 2018—partly due to global market jitters—it only raised $180M, valuing the company at $882M.

Using the share price at the writing of this article ($24.57) the follow-on offering could raise up to approximately $334M. Huya will price the offer after New York market close today. In case the offering will be completed that puts Huya’s valuation after the follow-on offer between $2.2B to $2.7B depending on the actual price of the offering. This will mark roughly a tripling in value of the company within the timespan of one year.

Huya_Ownership

As shown in the graphic above, YY Inc. will own the largest stake at 38.9% and will remain the controlling shareholder representing 52.5% to 52.8% of Huya’s total voting power. Tencent will hold 40.1% to 40.2% of the total voting power via Linen Investment Limited after the offering is completed, with an option to purchase additional shares to reach 50.1% of total voting power, which is only exercisable between March 8, 2020, and March 8, 2021.

Huya reported fourth-quarter 2018 earnings of ¥1.5B RMB ($218.9M), an increase of 103.1% over the same period in 2017. Monthly active users (MAU) increased by 30.7% to 50.7M.

“Our strategic focus on esports continues to deliver encouraging results,” Rongjie Dong, CEO of Huya told investors alongside the earnings report. “In 2018, our platform generated more than 1.6B viewership from over 400 esports events broadcasted. We will continue to enrich our content ecosystem, providing more services and opportunities to our broadcasters and partners.”

In January, ESL announced that Huya and Huomao will equally share the media rights of ESL events in 2019. This will include the ESL One series, Intel Extreme Masters (IEM), and CS:GO Pro League

.

Tobias Seck contributed to this article.

American depositary sharesAsiaChinaCounter-Strike: Global OffensiveCS:GO Pro Leagueesl oneHuyaIntel Extreme MastersinvestmentsIPOstocksStreamingTencentUnited States North AmericaYY Inc.

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