Qihoo's Chairman Says Internet Security Firm Has Not Considered Backdoor Listing
Yicai Global
/SOURCE : Yicai
Qihoo's Chairman Says Internet Security Firm Has Not Considered Backdoor Listing

(Yicai Global) Aug. 23 -- The chairman of Qihoo 360 Technology Co., a Chinese Internet security firm that delisted in New York last month, has said "rumors are going around, but the company has not planned any capital projects, or contacted any companies (about a backdoor listing)."

Mr. Zhou Hongyi told reporters he gets calls every day recommending shell companies. Speculation has been rife that Qihoo may re-list on China's A-share market through a backdoor listing or on the strategic emerging industries board.

Qihoo faced a number of risks during its privatization process due to the sheer size of the capital required, he said. The cost of exiting the US market totaled USD10 billion, five times the original issue price.

Asked about his reasons for returning to China at such a high price, Mr. Zhou said, "We provide network security protection and solutions to many sectors. We can't get qualifications for many businesses if we are a foreign company, so by returning to the Chinese market, Qihoo 360 is seeking to play a larger and more important role in network security."

He said that in the last couple of years the company has focused on restructuring or dividing up existing businesses, with the aim of transforming from a large vessel into a fleet.

Qihoo's security business will split into two companies, and the enterprise security division will become a separate sub-group led by Qihoo CEO Qi Xiangdong under Qihoo 360 Group. Intelligent hardware business operations will remain independent. The company plans to spin off its intelligent hardware products business within the year.

"Any well-performing subsidiaries may carry out financing independently or launch an initial public offering," Mr. Zhou said. "Businesses facing major future uncertainties or requiring a restart will be split off. They will become subsidiaries of Qihoo 360 Group after the split, with their own independent accounting and staffing plans."

As for the reason behind the restructuring, he said, "If the same criteria apply to both mature and innovative businesses within the same company, it would be difficult for the latter to achieve real growth."

Mr. Zhou wants to incentivize staff through the splits. Separating the businesses will give every manager of an individual business segment the opportunity to become a partner at the company.

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