Chinese regulators have suggested to Xiaohongshu Technology Co., the parent company of the Rednote app, that involving a state-owned investor could facilitate a smoother approval process for any future public listing, according to sources familiar with the situation.
It remains uncertain whether Xiaohongshu will follow this advice, as the sources chose to remain anonymous due to the ongoing and confidential discussions. Neither the China Securities Regulatory Commission nor Xiaohongshu representatives responded immediately to requests for comments. In light of the uncertainty surrounding TikTok’s future in the United States, many social media users have turned to Xiaohongshu, which resembles Instagram and is one of the few Chinese tech unicorns yet to go public.
The app has recently become one of the most downloaded free applications on Apple’s iPhone charts in the U.S. and is projected to achieve a net income exceeding $1 billion (approximately RM4.4 billion) in 2024, according to Bloomberg News. Users of Xiaohongshu can share various media, read reviews, and shop. The company’s major investors are reportedly in discussions to sell shares with a valuation of at least $20 billion. Underwriters have been chosen for a potential share offering in Hong Kong, as reported by the South China Morning Post in December. Xiaohongshu’s investors include Alibaba Group Holding Ltd, Temasek Holdings Pte, and Tencent Holdings Ltd, with others considering divesting some of their stakes. This has attracted interest from investors such as Hillhouse Investment and Hongshan Capital, previously known as Sequoia Capital China, along with potential involvement from Temasek.
Following a period of stringent regulations aimed at curbing the influence of tech companies, the Chinese government has shifted its focus to fostering investment in the sector while enhancing capabilities in areas like artificial intelligence.
