Twitter-like messaging service Weibo Corp filed on Friday to raise $500 million via a US initial public offering, as Chinese companies flock to the American market in record numbers to take advantage of soaring valuations. Weibo, owned by Sina Corp, becomes the latest Chinese Internet giant to tap US markets, following on the heels of search service Baidu and its own corporate parent. Alibaba, which owns a stake in Weibo, is expected to raise about $15 billion in New York this year, in the highest-profile Internet IPO since Facebook's in 2012.
But underscoring challenges facing Internet firms operating in a heavily censored and tightly controlled media environment, Weibo warned investors in its Friday IPO filing about uncertainty arising from Chinese government regulation. It highlighted in particular a regulation that came into effect in September, under which Internet users who knowingly make or share information considered defamatory or false could face up to three years' jail time in China.
"The implementation of this newly promulgated judicial interpretation may have a significant and adverse effect on the traffic of our platform and discourage the creation of user generated content," the company said in its filing. Beijing expressly bans a range of material in media deemed sensitive, from open political opposition to criticism of important officials. Responsibility for policing such content often falls on companies such as Weibo, which could face fines or even revocation of their licenses. The government "may require us to limit or eliminate the dissemination of such information on our platform. Failure to do so may subject us to liabilities and penalties and may even result in the temporary blockage or complete shutdown of our online operations," it said.
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