Sogou's IPO ups ante in competition with rival Baidu

Traders work at the New York Stock Exchange in New York, the United States, on Nov. 9, 2017. Sogou Inc., a Chinese search engine company backed by Tencent and Sohu, rang the New York Stock Exchange (NYSE) opening bell on Thursday in celebration of its initial public offerings (IPO). Shares of Sogou, trading under the ticker symbol "SOGO", started trading at 13 dollars per ADS on Thursday, and closed at 13.50 dollars apiece, rising 3.85 percent. (Xinhua/Wang Ying)

Sogou, Chinese Internet and gaming company Sohu.com's search unit, made its debut on the New York Stock Exchange on Thursday, as the Tencent-backed company upped the ante in competition with its better-known domestic rival Baidu.

The Chinese search engine, secondary only to Baidu in market share, priced its IPO at $13 per American Depository share, at the top of the marketed range of $11 to $13.

Sogou sold 45 million shares in its IPO, aiming to raise as much as $585 million. The IPO proceeds will be used for research and development as well as sales and marketing, according to Sogou's filing with the stock exchange in late October.

During a video call for journalists before the stock exchange opening bell rang on Thursday, 39-year-old Wang Xiaochuan, chief executive of Sogou, appeared contented after years of effort to obtain the listing.

In response to questions from the Global Times over whether Sogou's increasing commitment to artificial intelligence (AI) would help in narrowing its gap with Baidu, which is also investing heavily in AI, Wang said that Sogou's AI vision goes beyond making its search engine and input keyboards smarter.

He said the company has done a better job than its competitor in terms of focusing on developing core AI capabilities, while its competitor, which has expanded into areas such as driverless cars, seems to have deviated from its primary path. He didn't explicitly name the competitor, which is believed to be Baidu.

Sogou held a 20.9 percent share of China's mobile search market in the first half of the year, a distant second to Baidu's 41.2 percent, according to Guangzhou-based market research firm iiMedia Research.

Tencent is Sogou's largest shareholder with a 45 percent stake. Sohu remains its controlling shareholder, because its 39 percent stake carries more voting power due to its dual-class share structure.

Market observers see Sogou's IPO, the latest entry in a rush of technology companies based in the Chinese mainland to go public, as a signal of an ongoing investor frenzy for mainland tech stocks. But they also don't see any possibility that Sogou will catch up with Baidu in the foreseeable future.

"While both call themselves an AI company, Sogou has yet to be on par with Baidu, which has been much higher-profile and also more recognized in the AI arena, both domestically and globally," Xiang Yang, an industry analyst at Beijing-based CCID Consulting, told the Global Times on Thursday.

However, Xiang is bullish that global investors will continue to swarm into mainland technology companies.

In a striking sign, Tencent Holdings' online publishing unit China Literature saw its shares double in a stellar debut in Hong Kong on Wednesday. The company is on track to record the biggest first-day gain in the world this year for a major IPO.