Qihoo 360 Technology Co Ltd Buying Aggressively Into Hong Kong IPOs

Qihoo 360 Technology Co Ltd Buying Aggressively Into Hong Kong IPOs

Qihoo 360 Technology Co Ltd (NYSE:QIHU) has gained popularity among companies going public at Hong Kong Stock Exchange in the past two weeks. The Beijing-based Internet giant is the most popular antivirus provider in China. It has also forayed into the Internet search business, challenging Baidu Inc (ADR) (NASDAQ:BIDU).

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Qihoo 360 Technology invests in three companies going public

In the last two weeks, Qihoo 360 Technology has become a cornerstone investor in three Hong Kong IPOs. It has committed to purchase stakes in a social video platform, a telecom retailer and a property management firm, reports Prudence Ho of The Wall Street Journal. As a cornerstone investor, the Chinese Internet giant is required to hold on to its stake in those companies for at least six months after they have gone public.

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Qihoo 360 Technology is investing $5 million in Tian Ge Interactive Holdings, which plans to raise about $208 million in the offering. It will pour in $20 million in the $153 million listing of Beijing Digital Telecom, which is the biggest mobile phone retail chain in China. Qihoo 360 is investing $10 million in the $122 million IPO of the property management firm Colour Life Services Group.

Qihoo 360 Technology spent $210 million on investing activities in Q1

Qihoo 360 Technology’s investment in Tian Ge is no surprise. Qihoo’s variable-interest entity (VIE) holds 49% stake in a Tian Ge subsidiary, the social video platform revealed in its listing prospectus. But the company’s decision to become a cornerstone investor in the IPOs of Color Life and Beijing Digital is quite surprising. It’s difficult to understand why these two companies fit into its investment philosophy.

A solid cash reserve is one of the reasons Qihoo 360 Technology is so aggressively investing in IPOs. As of March 2014, the company holds $902 million cash, up from $301 million last year. In the first quarter of this year, the company spent $210 million on “investing activities,” up from $59 million in the same period last year.

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