Telstra could emerge with a holding of more than $500 million in its majority-owned Chinese online car advertising site, Autohome, which has filed for listing on the New York Stock Exchange.
The holding represents a substantial windfall for the Australian telco, which bought into the fast-growing Chinese technology play for a fraction of the price.
The float by Autohome is part of efforts to capitalise on strong investor demand for digital assets on Wall Street.
Social media group Twitter is pushing ahead with its stockmarket listing with plans to raise up to $US2 billion ($2.1 billion). Elsewhere, shares in Facebook have regained ground to trade above their listing price, valuing the company at more than $US100 billion.
Autohome is the largest online car sales website in China, the world's largest market for automobiles. The site could be valued at up to $US1 billion, analysts have speculated.
The float comes as Telstra is stepping up efforts to increase its exposure to the fast-growing Asian region.
"We believe there are opportunities to be explored in various geographies and various industry segments but we need to make sure we are focused on the right assets," Telstra chief executive David Thodey said on Tuesday.
The telco identifies Asia as one of three key growth areas for the company as it anticipates further decline in revenue from legacy business areas such as fixed-line telephony and the Yellow Pages directory business. At a recent investor briefing, Telstra said chief financial officer Andy Penn would work with Tim Chen, head of Telstra International, on the company's Asia strategy.
After the float of Autohome, Telstra will retain its control over the company and Mr Chen will stay on as chairman of the new listed entity. Telstra will control 51 per cent of voting rights as long as it holds 39.3 per cent of shares, according to the prospectus lodged with the US regulator, the Securities and Exchange Commission.
Telstra initially bought into the business in 2008 when former boss Sol Trujillo paid $76 million for a 55 per cent stake in Sequel Media, a technology start-up that owned the Autohome brand. Telstra paid $37 million to lift its stake in Autohome by an additional 11 per cent this year. This effectively values the entire business at about $330 million.
Autohome said it had experienced significant revenue growth while maintaining profitability.
Autohome has grown strongly in recent years on the back of the rapidly expanding car and internet industries in China. The number of new cars sold in China is expected to increase from 14.2 million in 2012 to 20.7 million by 2015, a year-on-year growth of 13.3 per cent.
The car sales site lifted its revenue from the equivalent of $75 million in 2011 to $126 million in 2012, the equivalent of a 61 per cent increase.
Autohome filed for an initial public offering of up to $US120 million in American depositary shares, and said it intended to use the proceeds to invest in technology and product development, as well as for boosting its sales and marketing efforts.
The initial public offer will be underwritten by Deutsche Bank and Goldman Sachs. With Eric Johnston