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Baidu's iQiyi files for $1.5B US IPO

Baidu Inc.'s streaming service iQiyi.com Inc. filed for an initial public offering in the U.S. of up to US$1.5 billion of its class A ordinary shares.

The company, which has applied to list its American depositary shares on the Nasdaq Global Market under the symbol IQ, has not yet specified the number of shares or price range for the IPO.

Goldman Sachs (Asia) LLC, Credit Suisse Securities (USA) LLC, Merrill Lynch Pierce Fenner & Smith Inc., China Renaissance Securities (Hong Kong) Ltd., Citigroup Global Markets Inc. and UBS Securities LLC are serving as underwriters for the offering.

The company said it would allocate 50% of the net proceeds to expand its content offerings, 10% to "strengthen" its technologies and 40% for "working capital and other general corporate purposes," adding that it may choose to utilize a portion of the net proceeds for acquisition of businesses, products, services or technologies.

The development comes after Baidu confirmed U.S. IPO plans for iQiyi earlier this month.

During a Feb. 13 earnings call, Baidu CEO Robin Li said that video content remains a key growth driver for Baidu.

"Video content distributed in feed has grown to 40% on average in Q4, up from 14% a year ago," Baidu Vice Chairman Qi Lu said.

Lu said that in December 2017, iQiyi's PC and mobile app daily average active users reached 76 million and 158 million, respectively, while monthly time spent on iQiyi's mobile app went up by 32% to 408 billion minutes, compared to 335 billion minutes in December 2016.

A recent survey by Kagan, a media research group within S&P Global Market Intelligence, measured key digital entertainment metrics in China and found that iQiyi is the most dominant over-the-top video service provider in the country in terms of paid subscriptions.

Baidu recently posted revenues that surpassed the company's fourth-quarter 2017 guidance. The company reported revenue of 23.56 billion Chinese yuan for the fourth quarter ended Dec. 31, 2017, increasing 29% year over year compared to 18.21 billion yuan in the year-earlier period, slightly above the S&P Capital IQ analyst consensus estimate of 22.54 billion yuan in revenue for the quarter ending Dec. 31, 2017.