April 22, 2018

Tencent-backed search firm Sogou jumps 10 percent in U.S. market debut

10 November 2017, 06:24 | Lucia Cruz

Pony Ma chairman and chief executive of Tencent Holdings which is launching Sogou shares in New York PA Images

Pony Ma

Sogou then hovered around $13.50 for most of its first day of trading, closing the day at $13.51, up about 4 percent.

Founded in 2005 by internet firm Inc (O:), Sogou runs China's second largest search engine by mobile queries, rivaling Baidu Inc (O:), and Alibaba's (N:) UCWeb.

Sogou has said in filings with the U.S. Securities and Exchange Commission that it expects to use proceeds from the $585-million IPO for research and development, sales and marketing, and general corporate purposes.

Sohu will remain Sogou's controlling shareholder after the IPO, while Tencent will own a 38.7 percent stake.

The flotation was jointly managed by United States banks JPMorgan and Goldman Sachs, along with Credit Suisse and China's CICC.

"Under the lead of Xiaochuan, the (Sougou) team has been pushing forward for innovation in technologies and products and established competitive advantages to redefine the search by AI and big data", said Zhang Chaoyang, CEO of Sohu.

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Sogou is the latest in a string of private Chinese internet companies to make offshore listings over the last two months. Sogou is controlled by internet portal operator Inc., but counts Tencent as a major shareholder with almost 40% of the company.

The company, which competes with Baidu, reported net income of $66.7 million for the nine months ended Sept 30, compared with $45.4 million for the same period a year earlier.

Its IPO follows Wednesday's hugely successful Hong Kong IPO of China Literature Ltd (HK:), the e-book unit of Chinese internet and media giant Tencent Holdings Ltd (HK:).

The failure of the market to fully embrace Sogou's float and drive its share price north is not fully clear given previous Chinese tech companies going public in the US have been popular.

Xinhua contributed to this story.

The pricing of the IPO was at the top of its expected range of between $11-$13 and the 45 million shares are expected to debut on NYSE under the symbol SOGO later on Thursday.

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