(Yicai Global) July 15 -- Chinese mobile live-streaming company Inke will acquire social app Jimu for USD85 million to enhance its entertainment offerings for youngsters.

Jimu will continue to run independently with its existing workforce, Beijing-based Inke said in a statement today that also forecast a CNY60 million (USD8.7 million) loss for the first half.

The acquisition will enable Inke to better serve clients, it added, saying the merger will give it a full circle of social networking and entertainment services.

Released in 2016, Jimu is a youth-focused social app for users who enjoy art, fashion and music. It has 12 million users despite not yet advertising, most of who are from first- and second-tier cities and born after 1995. The firm picked up CNY10 million (USD1.5 million) in B-round funding last month, led by Sequoia Capital.

The target had net assets worth CNY6 million at the end of last year, during which it lost CNY17.7 million. It had a CNY6.2 million deficit in 2017.

First-Half Loss

Rising costs of research and development are likely to lead to a first-half loss, Hong Kong-listed Inke added. It made CNY596 million (USD86.7 million) in adjusted net profit last year, on revenue of CNY3.9 billion (USD562 million).

The firm has been investing more to keep up with the rapid development of fifth-generation networking, artificial intelligence and other cutting-edge technologies so it can prepare for interactive entertainment applications and offer a greater experience, it said.

Inke has expanded its new product developments this year and its anonymous voice app Bujiu has attracted many users aged 19 to 24. It has also set up Laoyou to target the middle-aged and senior segments, who remain a largely untapped market in China's mobile internet sector.

Editor: James Boynton