Chinese video site set for $1.4b backdoor listing

Mango TV makes a quick move to the public market through a backdoor listing in Shenzhen, stealing a march on its bigger rival iQiyi, which is slated to go public in the US next year.

Online video platform Mango TV is set to become the latest fast-growing Chinese technology startup to go public after agreeing a Rmb9.5 billion ($1.4 billion) backdoor listing on the ChiNext board of the Shenzhen Stock Exchange.

Hunan-headquartered Mango TV, which gained unicorn status after completing a series-B round of funding last year that valued the company at Rmb13.5 billion ($2 billion), will be injected into ChiNext-listed Happigo Home Shopping through a share swap deal, the company said on Thursday.

Happigo Home Shopping said it will raise $300 million from five undisclosed institutional investors to fund the reverse takeover of Mango TV.

As a result of the backdoor listing, Mango TV will become the second online video platform to list on the local stock market besides LeTV, countering a long-standing trend of Chinese video sites preferring to float in the US.

Sohu TV, a subsidiary of Chinese search engine giant Sohu.com, is currently listed on Nasdaq, as was Youku Tudou before it was taken private by Alibaba last year

Video site iQiyi, owned by Nasdaq-listed tech group Baidu, is also preparing to go public in the US, according to sources familiar with the situation.

Happigo lucky

These companies have picked the US as their listing venue partly because they have yet to become profitable, which bars them from seeking a mainboard listing in China. But for Mango TV a domestic listing appears to be a forgone conclusion since its controlling shareholder, Hunan Broadcasting System, also owns Happigo Home Shopping, the listed vehicle that will serve as its host.

The backdoor listing provides a ready platform for Mango TV's assets and allows it to go public quickly without the rigmarole of a formal initial public offering process.

In any case, there may be little monetary advantage from pursuing an IPO as Mango TV’s latest valuation suggests the online video platform has lost about 30% of its value in the past year, an unusual situation for a burgeoning sector tipped to disrupt the traditional TV industry.

That depressed valuation could be partly due to the fact that LeEco, LeTV's parent company, ran into financing difficulties last year, raising some concerns over the viability of rapidly expanding companies.

And Mango TV has certainly grown quickly. Founded in 2011 the business has expanded from a pure online video site into an integrated platform that comprises digital media and mobile television, as well as TV box and music streaming.

The company has exclusive rights to broadcast proprietary TV programmes produced by Hunan Satellite TV, including Singer, Happy Camp and Where Are We Going, Dad. 

Hunan Satellite TV is China’s second-biggest TV channel by number of viewers, trailing only the state-owned CCTV, according to the World Brand Lab.

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