Shanda-owned Cloudary files for up to $200 mln IPO

25 May 2011 17 h 32 min 10 comments

Cloudary Corp., a wholly owned subsidiary of Shanda Interactive Entertainment Ltd., revealed Tuesday 24 May in a regulatory filing that it will sell up to $200 million of its American Depositary Shares or ADS, in an initial public offering, which is proposed to be listed on the New York Stock Exchange. The company has not mentioned the number of shares to be sold, the estimated price range, and the ticker symbol it proposes to list under.

Shanghai, China-based Cloudary, formerly known as Shanda Literature Corp., operates Shanda’s online literature business. It had in mid-April made a confidential submission of a draft registration statement with the U.S. Securities and Exchange Commission for the proposed IPO. Following the IPO, Shanda Interactive expects to remain Cloudary’s majority shareholder.

 

 

 

 

 

 

 

 

 

(source: iChina Stock)

According to the prospectus, “The IPO will help Cloudary to sharpen its focus and be more flexible to pursue strategic opportunities in enhancing its leadership position in the online literature industry”.

Cloudary said its IPO would include shares belonging to current shareholders. According to the Form F-1 filed with the SEC on Tuesday, Cloudary plans to “use the net proceeds from the IPO to finance business expansion, including for content acquisitions, as well as sales and marketing initiatives, repayment of loans and borrowing and working capital as well as for general corporate purposes, including financing potential strategic acquisitions and investments.” BofA Merrill Lynch and Goldman Sachs (Asia) L.L.C. are the underwriters for the IPO.

 The company currently offers free as well as paid premium content. It generates revenues primarily by charging users for viewing paid content on its websites and using its community tools and through revenue-sharing arrangements with other distribution channel providers, including e-readers and wireless carriers. It also generates revenues from its offline publishing business by selling books through chain and online bookstores and wholesalers.

According to RTT News, “Cloudary is the largest online community-driven literary platform in China, comprising an expanding library of original and copyrighted third-party literary works and a large and highly engaged community of users which can be monetized across multiple media formats and devices.The literary platform includes six original literature websites covering a wide array of genres which in the aggregate attracted an average of over 69.0 million monthly unique visitors in the first quarter of 2011, according to monthly statistical reports issued by iResearch. Since its inception through March 31, 2011, about 1.3 million authors created over 5.2 million literary works on the websites.”

 

According to its F-1 filing, the company generated net revenues of RMB 393.0 million ($60.0 million) in 2010, significantly higher than RMB 134.6 million in 2009. In Q1 2011, Cloudary had revenues of $21.2 million, generating a net loss of $564,000. 

SOURCES: Shanda, RTT News, iChina Stock (24/5/11)

IN THE PRESS:

. Shanda Literature CEO: Our Subsidiary Has Become China’s Top Private Publisher ( iChina Stock, 13/4/11)

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