Newly listed shares of search engine Sogou Inc. rose in their NY trading debut after pricing at the top of their range, as investors were enticed by the company's close ties to internet giant Tencent Holdings Ltd.
Sogou has said in filings with the U.S. Securities and Exchange Commission that it expects to use proceeds from the $585-million IPO for research and development, sales and marketing, and general corporate purposes.
Its IPO follows Wednesday's hugely successful Hong Kong IPO of China Literature Ltd (HK:), the e-book unit of Chinese internet and media giant Tencent Holdings Ltd (HK:). Calling the IPO a "milestone", he hopes that a U.S. IPO will help with hiring and make it easier to collaborate with U.S. tech companies. The company's profit, excluding extraordinary items, fell 44% past year to $56 million, as its revenue grew 12% to $660 million.
Beijing-based Sogou aims to be a Google for China. Sogou says this massive user base represents a largely untapped opportunity to make money through ads.
Founded more than a decade ago, the company operates in an online search market dominated by Baidu Inc., which reported a $1.2 billion profit on $3.53 billion in revenue in its latest reporting quarter.
Beijing-based Sogou, which competes with Baidu and Alibaba's UCWeb, reported net income of $66.7 million for the nine months ended September 30, compared with $45.4 million for the same period a year earlier. 30 jumped 47% to $66.7 million, while total revenue increased 29% to $630.6 million. Sohu.com will remain Sogou's controlling shareholder after the IPO.
Tencent's other notable investments include stakes in ride service Lyft, electric vehicle maker Tesla Inc (O:) and most recently a substantial investment Snapchat owner Snap Inc (N:).
JP Morgan Securities, Credit Suisse, Goldman Sachs (Asia), China International Capital Corp.