iQiyi's IPO next year: raising about US$1 billion and valuing up to about 5 billion

Foreign media reported that iqiyi, a video website owned by Baidu, plans to IPO in the United States or Hong Kong in 2017, which is expected to raise US $1 billion and value iqiyi at about US $5 billion. Iqiyi also plans to raise money in the form of convertible bonds before IPO, but the exact scale and timing of the financing are not clear, according to people familiar with the matter.

Foreign media: iqiyi or IPO will raise about $1 billion next year

Foreign media reported that iqiyi, a video site owned by Baidu, plans to raise US $1 billion in the United States or Hong Kong in 2017, valuing iqiyi at about US $5 billion.

people familiar with the matter said that iqiyi also plans to raise money in the form of convertible bonds before IPO, but the exact scale and timing of the financing are not clear.

one of the people familiar with the matter said iqiyi plans to raise about $1 billion through IPO. However, at present, iqiyi is still negotiating with potential investors, so the specific quantity and conditions may be adjusted.

iqiyi said at his annual marketing conference in Shanghai in October that he would spend up to 10 billion yuan ($1.4 billion) on buying and producing content in 2017.

in the first half of this year, a consortium led by Baidu CEO Robin Li and iqiyi CEO Gong Yu tried to buy iqiyi from Baidu, turning iqiyi from a Baidu holding company into a privately held company.

but Baidu's majority shareholder, US hedge fund Acacia Partners, believes that the $2.8 billion valuation of iqiyi's privatization is too low, which runs counter to the long-term interests of Baidu and its shareholders, and asks Robin Li to cancel his acquisition of iqiyi.

iqiyi is currently 80.5 per cent owned by Baidu, while Robin Li currently owns 15.9 per cent of Baidu, according to a Baidu filing to SEC in April.

< strong > the lossmaking iqiyi dragged down Baidu's financial report < / strong >

according to Baidu's financial report, iqiyi's content acquisition cost was 830 million yuan in 2013, while the content acquisition cost soared 125.4% to 1.9 billion yuan in 2014. The cost of content acquisition also increased significantly from 2014 to 2015. From January to March 2014, iqiyi's content cost was 393 million yuan, and from January to March 2015, its content cost rose 54.6 percent to 608 million yuan.

according to Baidu's financial report, iqiyi's revenue in 2015 was 5.295 billion yuan, an increase of 84.3 percent from 2.873 billion yuan in 2014, while iqiyi's revenue in 2014 was also up 113.6 percent from 1.345 billion yuan in 2013.

because costs and expenses are higher than revenue, iqiyi has been in a state of operating loss in the last 3 years, and the loss continues to expand. It is reported that iqiyi lost 743 million yuan in 2013, 1.11 billion yuan in 2014 and 2.38 billion yuan in 2015.

iqiyi's rising cost has directly led to the decline of Baidu's net profit margin. It is reported that Baidu's operating profit in the third quarter of 2015 was 2.512 billion yuan ($395.2 million), down 35.9% from a year earlier. Baidu's operating profit margin in the third quarter of 2015 was only 14%, compared with 29% in 2014 and 38% in 2013.

Edit: yvette