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January 21, 2020

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UCloud up 120% on STAR debut

UCloud, the first dual-class share structure company on domestic stock markets, surged almost 120 percent during its first trading day on the STAR market yesterday.

Shanghai-based UCloud is also the first listed cloud firm on the Chinese mainland.

UCloud closed at 72.95 yuan (US$10.4), a 119.5 percent jump from its IPO price. It’s market value reached 30.8 billion yuan at the close of market.

“UCloud’s listing represents the meaning of independent innovation and doing basic research in China. Besides China’s Internet giants, startup companies still have the opportunity to grow,” UCloud CEO Ji Xinhua said during a listing ceremony at the Shanghai Stock Exchange.

UCloud, founded in 2012, generated revenue of 699 million yuan in the first half, up 32.13 percent year on year. It now has over 10,000 enterprise clients and services that affect several hundred million people.

The dual-class, or special voting rights, structure allows company founders to keep outsized voting rights relative to other investors.

Ji, along with Mo Xianfeng, chief technology officer, and Hua Kun, chief operating officer, hold 19.4 percent of UCloud’s shares but will have 54.61 percent of the voting rights, UCloud said.

Many top tech firms, including Alibaba, Baidu, Facebook, and Xiaomi, have adopted the dual-class share structure. In 2018, the Hong Kong Stock Exchange changed its policies to allow the first dual-class IPO from Xiaomi Corp.

“UCloud is not the only one. It’s widely needed in the domestic Internet industry,” Ji said.

The STAR market is seen as a foundation for deepening reforms in China’s A-share market, as well as an attractive market for high-profile Chinese tech companies to list at home.

In the cloud sector, UCloud will adopt an ABC strategy, referring to artificial intelligence, big data and cloud computing.

In 2018, China’s public cloud market size hit US$7.19 billion and it is expected to hit US$27.5 billion in 2022, according to researcher IDC.

In 2020, UCloud’s opportunities will also come from 5G, an increasing number of traditional firms adopting cloud service and overseas expansion, Ji said.

However, UCloud is facing fierce competition. Baidu, Alibaba and Tencent all have their own cloud businesses. Meanwhile, global cloud giants Amazon and Microsoft also operate in China.


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