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Tencent- and Sohu-backed Chinese search-engine Sogou debuts on NYSE

2017-11-10 06:21:09 (Beijing Time)         news.xinhuanet.com

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CEO of Sogou Inc. Wang Xiaochuan (2nd L, Front) and CEO of sohu.com Zhang Chaoyang (1st R, Front) attend the opening bell ceremony at the New York Stock Exchange in New York, the United States, on Nov. 9, 2017. Sogou Inc., a Chinese search engine company backed by Tencent and Sohu, rang the New York Stock Exchange (NYSE) opening bell on Thursday in celebration of its initial public offerings (IPO). Shares of Sogou, trading under the ticker symbol "SOGO", started trading at 13 dollars per ADS on Thursday, and closed at 13.50 dollars apiece, rising 3.85 percent. (Xinhua/Wang Ying)

NEW YORK, Nov. 9 (Xinhua) -- Sogou Inc., a Chinese search engine company backed by Tencent and Sohu, rang the New York Stock Exchange (NYSE) opening bell on Thursday in celebration of its initial public offerings (IPO).

Sogou priced its IPO of 45,000,000 American depositary shares (ADSs) at 13 U.S. dollars per ADS, on the top of the pricing range of 11 dollars to 13 dollars given by the company, for a total IPO size of 585 million U.S. dollars, assuming the underwriters do not exercise their over-allotment option. Each ADS represents one Class A Ordinary Share.

Sogou has granted the underwriters a 30-day option to purchase up to an additional 6,750,000 ADSs to cover over-allotments.

Shares of Sogou, trading under the ticker symbol "SOGO", started trading at 13 dollars per ADS on Thursday, and closed at 13.50 dollars apiece, rising 3.85 percent.

Sogou Search is the second largest search engine in China by mobile queries and Sogou is the fourth largest internet company in China based on Monthly Active Users (MAU) in September 2017, according to iResearch.

Proceeds from the IPO will be used for research and development, sales and marketing efforts, and general corporate purposes, Sogou said in a filing.

Sogou's shareholders unveiled in the IPO filing are in highlights, as China's tech giant Tencent and internet company Sohu are the two largest shareholders.

According to the filing, after the IPO due to the additional voting power of the Class B Ordinary Shares that will be held by Sohu and Tencent, Sohu will hold approximately 33.4 percent of the total of Sogou's outstanding Class A and Class B Ordinary Shares and control approximately 44.0 percent of the total voting power of the combined total of Sogou's outstanding Class A and Class B Ordinary Shares.

Meanwhile, Tencent will have an indirect shareholding of approximately 38.7 percent of the total of Sogou's outstanding Class A and Class B Ordinary Shares and control approximately 52.3 percent of the total voting power of the combined total of Sogou's outstanding Class A and Class B Ordinary Shares.

Sohu and Tencent together will have the power to decide all matters that may be brought to a vote of Sogou's shareholders.

However, under a voting agreement, Sohu will continue to control the Board of Directors consisting of seven directors.

Within three years following the completion of this offering, four of the board directors will be appointed by Sohu, two will be appointed by Tencent, and the seventh will be Sogou's then chief executive officer.

Some analysts said that backing by Tencent and Sohu gives Sogou a unique competitive advantage to other companies, but others argued that over-reliance on those two companies may undermine their overall competitiveness.

Under Sogou's business collaboration arrangements with Tencent, Sogou Search is the default search engine on various Tencent products that provide general search offerings, such as the Mobile QQ Browser, qq.com, and the PC Web directories daohang.qq.com and hao.qq.com.

For the nine months ended Sept. 30, 2017, Sogou's revenue was 630.6 million U.S. dollars, up 29 percent from the same period a year ago, while its net income for the six months ended on Sept. 30, 2017 was 66.7 million U.S. dollars, up 47 percent from the year-ago period, according to the company's prospectus.

The number of IPOs in the U.S. capital markets has obviously increased this year. As of November 9, there have been 138 IPOs priced, an increase of 43.8 percent from the same date last year, while total proceeds raised were 32.8 billion U.S. dollars, an increase of 95.1 percent from the same date last year, according to Renaissance Capital.