Chinese Internet security software provider hopes to raise $200 million

Qihoo 360 Technology Co generates revenue from advertisements with other companies through its security software and other Internet services. The company became profitable in 2009, and its net income more than doubled to $8.5 million in 2010 from $4.2 million in 2009. [Photo / China Daily]

BEIJING - In another example of a Chinese IT company taking a stab at an overseas listing, the Chinese security software provider Qihoo 360 Technology Co plans to raise up to $200 million through an initial public offering (IPO) in the United States.

The company aims to seek the public listing in the first quarter of this year, with UBS AG and Citigroup Inc as its leading underwriters, it said in a regulatory filing to the Securities and Exchange Commission on Monday.

The proceeds from the IPO will be used for research and development and acquisition of technologies, products or businesses, it said. Qihoo 360 said it is the third-largest Internet company by user base, which reached 339 million in January, citing the domestic research company iResearch.

Its IPO plan came after Chinese Internet companies Youku.com Inc and E-commerce China Dangdang Inc went public on the New York Stock Exchange in December. Both companies saw their share prices surge immediately after their debut as China, with the biggest number of Internet users in the world, has attracted more and more investors.

"If the IPO plan goes well, Qihoo 360 will be the second IT company to go public with a strong client software, after Tencent Holdings Ltd's QQ instant-messaging service," said Zhang Pengcheng, an analyst with the Beijing-based research company Analysys International.

Qihoo 360 generates revenue from advertisements with other companies through its security software and other Internet services. "More and more Chinese IT companies will seek to list in the coming years, in a new overseas IPO wave marked by those of Youku and Dangdang," Zhang said.

He estimated that more than 20 e-commerce companies may join the wave as the market is booming in China. The first wave of Chinese IT companies going public was in 2000, with three portals, NetEase.com Inc, Sina Corp, and Sohu.com Inc. The second was in 2004, when nine IT companies listed, including Tencent. In 2007, six companies listed, mainly from the online gaming sector.

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Qihoo 360's total revenue reached $57.7 million in 2010, with a year-on-year increase of 78.5 percent, and that revenue more than tripled from $16.9 million in 2008, the filing showed. The company became profitable in 2009, and its net income more than doubled to $8.5 million in 2010 from $4.2 million in 2009.

Qihoo 360 earlier had a dispute with Tencent, which was resolved after government intervention.

Later, Tencent brought a claim against Qihoo 360 accusing the company of unfair competitive practices in October. In November, Qihoo 360 filed a defamation claim against Tencent. Both cases are pending, according to the filing.