Kingsoft Office (金山办公, 688111:SH), a subsidiary of the Hong Kong bourse-listed Kingsoft Corporation (金山软件, 3888:HK), has passed the final review and is now preparing to start trading its stock on the Shanghai Stock Exchange Sci-Tech Innovation Board, known as the Star Market.
While giving the firm’s IPO application the green light, the Listing Committee has also emphasized a few pain points, including investment information disclosure: the watchdog is seemingly concerned about how Kingsoft allocates money, as the private capital received in the recent years can affect the company’s financial records.
According to publicly accessible sources, Kingsoft Office carried out a USD 50 million Series A round of financing in November 2013. Morningside Venture Capital, GGV Capital and Shunwei Capital made up a trio of investors that took part in the event.
Meanwhile, billionaire entrepreneur Lei Jun (雷军), founder and CEO of Xiaomi (1810:HK), is going to have the third listed company under his reign. Indirectly holding 11.99% of Kingsoft Office’s equity, he is, de facto, the main decision-maker in the firm.
Founded in 1988, Kingsoft Office has grown into one of the world’s most prominent office software enterprises. With over 1,900 employees, six R&D centers and offices in the United States and China, the company holds 42.75% of the domestic market and is actively expanding abroad. As mentioned in the Star Market prospectus (in Chinese), it recorded 328 million monthly active users of its primary product – universal office suite WPS Office – in March 2019.
Having relatively high compatibility with Microsoft Office, Google Docs, Adobe PDF and other global leading office software packages, WPS Office has a set of competitive advantages over the rest. Besides quite attractive pricing options and localization, the company provides a free version that supports an extensive arsenal of functions.
Software business is a priori something that depends entirely on research and development. The company spent a total of CNY 907.48 million (USD 127.41 million) on R&D over the last three years. Holding 179 patents, nearly 20 of which are international, the firm is among the most knowledge-intensive applicants to the Star board.
Kingsoft Office is one of the biggest enterprises to have applied for an IPO in the sci-tech venue. According to the recent EqualOcean report (download), it is the most significant contributor to the ‘industry profit pool’. The company’s net profit grew at a CAGR of 54.66% from CNY 129.93 million (USD 18.33 million) in 2016 to CNY 310.67 million (USD 43.81 million) in 2018.