Shares of Beijing-based cloud service provider Kingsoft Cloud Holdings (NASDAQ: KC) closed at USD 23.8 on its first trading day on the Nasdaq, 40.2% up from its initial public offering price of USD 17 apiece, during the first Chinese company’s IPO after the fraud scandals involving Luckin Coffee and Tal Education Group.
The firm, which spun off from Chinese software firm Kingsoft Corporation and is backed by Chinese phone maker Xiaomi, raised USD 510 million after offering 30 million American depositary shares at USD 17 each, the company announced Friday on a press release.
Kingsoft claims to be the third largest internet cloud service provider in China, citing data from Frost & Sullivan. It made RMB 3.9 billion (USD 567.2 million) in revenue in 2019, up 77% from RMB 2.2 billion in 2018, according to its prospectus released on May 4.
Lei Jun, Kingsoft Cloud’s chairman, said in another press release that the firm’s “successful US IPO” shows that investors favor companies with transparent information and proven results. Lei is also chairman of Xiaomi (HKG: 1810) and Kingsoft Corp (HKG: 3888), both of which are investors for Kingsoft Cloud, according to the prospectus.
Kingsoft Cloud’s IPO comes after Luckin Coffee shocked the United States capital market by admitting inflated sales. Following Luckin, Baidu’s video platform iQiyi was also hit by fraud allegations, while Beijing-based TAL Education Group (NYSE: TAL) also disclosed sales fraud.
Also, short-seller Citron Research issued a report on April alleging that another online education platform, Beijing-based GSX Techedu (NYSE: GSX) has overstated its revenue by 70%. GSX Techedu reported on Wednesday hyper-growth in both net revenues and net income for the first quarter of 2020, and during the earnings call, it stated that “data fabrication doesn’t exist,” according to the company’s chief financial officer Shannon Shen.