(Feb 17): Chinese regulators have informally indicated to Xiaohongshu Technology Co, owner of the Rednote app, that bringing in a state-owned investor could help make approvals smoother for any future listing, people familiar with the matter said.

It’s unclear if Xiaohongshu will decide to act on the suggestion, the people said, asking not to be identified because the deliberations are ongoing and private.

Representatives for the China Securities Regulatory Commission and Xiaohongshu didn’t immediately respond to requests seeking comment.

With uncertainty shrouding TikTok’s future in the US, social media users have been flocking to Xiaohongshu, a Chinese Instagram-like service. It is one of a handful of Chinese internet unicorns yet to debut on the stock market.

Xiaohongshu has become one of the most downloaded free apps on Apple Inc.’s iPhone charts in the US. It is also on track to post net income of more than US$1 billion (RM4.4 billion) for 2024, Bloomberg News has reported. Its users can share photos, videos and other media, as well as check reviews and shop.

Xiaohongshu’s biggest investors are in talks to sell shares at a valuation of at least US$20 billion, people familiar with the matter have said. Underwriters have been selected for a possible share sale in Hong Kong, the South China Morning Post reported in December.

The company’s investors include Alibaba Group Holding Ltd, Temasek Holdings Pte and Tencent Holdings Ltd. Others are considering selling some of their holdings, drawing interest from stakeholders including Hillhouse Investment and Hongshan Capital, formerly Sequoia Capital China, as well as potentially Temasek.

After a widespread clampdown on tech companies to rein in their influence, the Chinese government has shifted tack to encourage investment in the sector as it builds up capabilities in areas such as artificial intelligence.

Uploaded by Magessan Varatharaja