Kunlunxin, the chip unit in which Baidu holds a 57.67% stake, has initiated IPO counseling for potential listings both in Hong Kong and on the Shanghai STAR Market, according to Morgan Stanley.
Sources cited by Morgan Stanley indicate the Hong Kong listing is the principal aim and that the company is targeting a timetable in the late second quarter to early third quarter. Those same sources describe the listing process as moving forward smoothly.
The firm is pursuing an H-share listing in Hong Kong. Morgan Stanley notes that the H-share structure should provide a degree of insulation from recent policy changes that have affected red chip companies. By contrast, the separate filing on the Shanghai STAR Market is being positioned as an option that could enable a future onshore listing. The STAR Market already hosts several hundred technology firms.
Morgan Stanley expects Kunlunxin to remain a consolidated subsidiary of Baidu if and when it lists in Hong Kong. The bank also highlighted the possibility that the company could attract strategic investors down the line, particularly from its supply chain - naming potential participants such as customers and production-facility partners.
In sum, the dual-path approach leaves Kunlunxin flexibility: it is proceeding with a Hong Kong H-share listing as the main route while keeping the Shanghai STAR Market filing as a possible avenue for a future onshore presence. Baidu's majority ownership and the expectation that Kunlunxin will remain consolidated under Baidu at the point of listing are explicit elements of the plan as described by Morgan Stanley.
Summary
Kunlunxin has begun IPO counseling for listings in both Hong Kong and the Shanghai STAR Market. Morgan Stanley reports the Hong Kong H-share listing is the priority with a target timeframe of late Q2 to early Q3, and that the process is progressing smoothly. Baidu owns 57.67% of Kunlunxin and the unit is expected to remain consolidated under Baidu at the time of a Hong Kong listing. The Shanghai filing provides an option for a future onshore listing, and Morgan Stanley flagged the potential for future strategic investors from the supply chain.