A Tencent subsidiary, China Literature, filed for an initial public offering (IPO) in Hong Kong which is expected to raise as much as $800 million, Reuters reported.
China Literature, China’s largest online publishing and e-book company, aims to raise funds for potential acquisitions and expand its mobile reading business, the news agency said.
Martin Lau, president and executive director of Tencent, said in March it was planning to spin off the unit on the Hong Kong stock exchange.
Bank of America Merrill Lynch, Credit Suisse and Morgan Stanley were hired as joint sponsors of the proposed listing. The structure of the deal was not disclosed, but Tencent is expected to hold at least 50 per cent of China Literature after the spinoff and the listing will likely consist of 15 per cent of the company’s enlarged share capital, Reuters said.
China Literature’s business is similar to Amazon’s Kindle store, operating a platform with 8.4 million literary works from 5.3 million writers.
The company posted a net profit of CNY30.4 million ($4.49 million) in 2016, its first, on revenue of CNY2.6 billion, which was up 62.5 per cent from 2015.
Tencent is China’s largest social media and gaming firm.