Deals

‘China’s YouTube’ Tudou raises $174M in U.S. IPO

YouTube-like site Tudou has priced its initial public offering (IPO) and will begin trading on the Nasdaq stock market this morning under the symbol TUDO, reports Bloomberg.

The site lets you access movies, TV shows, self-produced content and user-generated videos — although, most U.S. visitors probably know it best as a place to catch illegally streaming programs. (We addressed the issue of Chinese piracy sites being funding via U.S. stock markets in our coverage of Xunlei Limited.)

Tudou, which is China’s second largest streaming video sharing site after Youku, raised $174 million yesterday in its U.S. IPO, according to the report, which cites a person with knowledge of the matter. The company sold 6 million American depositary receipts (ADR) at $29 apiece, according to a regulatory filing.

Tudou’s shares were priced at a 58 percent discount compared to rival Youku, valuing the company at $822 million or about one-third the size of Youku. The IPO comes after China’s biggest Internet search site, Baidu Inc., approached Tudou about a possible takeover, according to the report.

Money from the IPO will go toward technology upgrades, bandwidth expansion and streaming licensing.

“Some of the biggest challenges they have now is in acquiring content also expanding their CBN to make sure that the video streaming in China is a good experience for people,” said David Orfao of General Catalyst Partners, which led a $19 million investment in the company in 2007. “This capital is going to allow them to tackle the two biggest obstacles they have.”

“The competitve landscape in China has thinned out, Orfao told VentureBeat. “Tudou certainly wants to become number one… but they are focused on becoming number one in user-generated video, which is very attractive to the 18-30 demographic.”

Orfao also added that this demographic is very attractive to a number of large companies (Coca-Cola, Gatorade, Nike) that want to advertise their products to the Chinese audience.