China’s ‘Search Dog’ is said to be planning an IPO valued at $3 billion
March 20, 2015 04:01 PM
(Bloomberg)—Sogou Inc., the Chinese search engine controlled by Sohu.com Inc., is planning a U.S. initial public offering at a valuation of more than $3 billion, people with knowledge of the matter said.
The Beijing-based company, whose name means “Search Dog” in Chinese, could sell shares as early as the second half of this year, said the people, who asked not to be identified because the information is private.
Spinning off China’s third-largest search site would provide a boost to majority owner Sohu, the Internet portal operator whose shares have lost more than half their value since an April 2011 peak. It would also provide funds for Sogou to gain ground against industry leader Baidu Inc. with the country’s 649 million Internet users.
Sohu rose 3.5% to $51.72 as of 12:12 p.m. in New York Friday, giving it a market value of about $2 billion.
Sogou’s fourth-quarter revenue surged 70% from a year earlier to $119 million, Sohu said in February. The Sogou site had a 6.9% share of web search queries in China in the fourth quarter, trailing Baidu’s 74.4% and Qihoo 360 Technology Co.’s 17.3%, according to data compiled by Bloomberg Intelligence.
Sogou is seeking a listing after Chinese Internet companies traded in the U.S. fell an average 18% in the past six months, according to data compiled by Bloomberg. Alibaba Group Holding Ltd., the nation’s biggest e-commerce company, raised $25 billion in a record IPO in September.
Tencent Holdings Ltd., China’s second-largest Internet company by market value, bought a 40.9% stake in Sogou in 2013 for $516 million in cash and folded its search operations into the company, according to its annual report. Shenzhen-based Tencent has connected the site with its WeChat application, the nation’s most popular mobile messaging service.
Sogou also offers a Web directory, online games and a system for typing Chinese that’s the most popular among smartphone users in the country, according to Sohu filings.
Jiang Xin, a Beijing-based spokeswoman for Sohu, and Sogou spokeswoman Dong Lu declined to comment. Canny Lo, a Shenzhen- based spokeswoman for Tencent, didn’t respond to a text message and email seeking comment.