STAR debut success for dual-class UCloud

UCloud, the first dual-class share structure company on domestic stock markets, surged almost 120 percent during its debut in the STAR Market on Monday. 

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. Its market value reached 30.8 billion yuan after market close. 

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

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 its services affect several hundred million people.

The dual-class (or special voting rights) structure allows company founders to keep out-sized voting rights relative to other investors.

Ji, along with Chief Technology Officer Mo Xianfeng and Chief Operating Officer Hua Kun, hold 19.40 percent of UCloud's shares, but will have 54.61 percent of the voting rights, according to the company.

Many top tech firms, including Alibaba, Baidu, Facebook, JD.com 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 told Shanghai Daily recently.

The STAR Market is seen as a foundation for deepened reforms in China's A-share market, as well as an attractive market for high-profile Chinese tech companies to get listed at home.

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

It will also speed up overseas expansion to serve more clients, including Belt and Road regions, the company said. 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 in its home market. Baidu, Alibaba and Tencent all have their own cloud businesses. Meanwhile, global cloud giants Amazon and Microsoft also operate in China.