BAT all on board, Kuaishou Keling AI's post-investment valuation reaches $18 billion.

Author | Huang Yu

More than a month after rumors about Kuaishou spinning off Kling AI for an independent listing began to spread, its path toward capitalization has finally been officially set in motion.

On the evening of July 2, Kuaishou issued an announcement disclosing the independent financing and restructuring plan for Kling AI. According to the announcement, Kuaishou will consolidate the assets and business related to Kling AI into Beijing Kling and introduce external investors.

In this financing round, the pre-investment valuation is $15 billion, with a total financing amount of up to $3 billion, and the proportion of additional shares to be issued will not exceed 16.67%. If the full financing cap is reached, Kling AI’s post-investment valuation would be approximately $18 billion.

Although Kling AI’s current valuation is lower than the initially rumored target valuation of $20 billion, based on Kuaishou’s market capitalization as of the close on July 2, its post-investment valuation is equivalent to about 76% of Kuaishou’s overall market capitalization.

After the financing is completed, Kuaishou’s shareholding in Beijing Kling will be diluted from 100% to about 68.33%, while still retaining its controlling position.

After the market opened on July 3, Kuaishou’s share price rose by more than 6% at one point.

In terms of the investor roster, this round of financing for Kling AI is also one of the highest-spec financing rounds in China’s AI sector in recent years.

There are 36 investors in this round, with Tencent, Alibaba, and Baidu among them. According to the announcement, Tencent plans to contribute about RMB 1.363 billion through two entities, with a shareholding ratio of about 1.12%; Alibaba Cloud Feitian plans to contribute about RMB 1.363 billion, with a shareholding ratio of about 1.11%; and Baidu plans to contribute RMB 341 million, with a shareholding ratio of about 0.28%.

In addition to the three major Chinese internet giants being fully involved, the investment list also includes Shanghai Guofang, the China Internet Investment Fund, the Beijing Municipal Artificial Intelligence Industry Investment Fund, CITIC Securities Investment, and other industry and state-owned capital, as well as well-known institutions such as CPE Yuanfeng and Qiming Venture Partners.

This means that the value of Kling AI has already been recognized by top-tier Chinese capital.

At present, the first batch of investors has agreed to inject $2.028 billion into Kling AI; on the same day, 15 additional investors signed joinder agreements and added $766 million in capital. The currently confirmed financing amount is about $2.795 billion, which is not far from the $3 billion cap.

When internet giants invest in an AI company at the same time, it reflects more the changes in the competitive landscape behind the scenes.

For Tencent, it is itself a major shareholder of Kuaishou, and it is also advancing the Hunyuan large model and the deployment of AI applications. Investing in Kling helps Tencent continue to share in the growth dividends of the AI video track.

Alibaba’s purpose is more direct. Over the past year, Alibaba has continued to strengthen cloud computing and AI infrastructure, hoping to bind more customers at the AI application layer through cloud services. As one of the fastest-commercializing video generation platforms domestically, Kling is also an important potential compute-power customer for Alibaba Cloud.

Although Baidu has the Wenxin large model, its deployment in the AI video generation field is relatively limited. Investing in Kling allows Baidu to share in industry growth and further improve the AI ecosystem.

In addition, the simultaneous entry of a large number of state-owned capital funds also shows that local governments and industrial capital are viewing AI video generation as an important investment direction for the next wave of artificial intelligence.

For these investors, Kuaishou has also provided a timeline commitment for the spin-off and listing of Kling AI.

According to the arrangement disclosed in the announcement, within nine months after the latest payment date of this financing round, Kuaishou will gradually inject into Beijing Kling, as it becomes the sole operating entity for the entire Kling AI business, the models, algorithms, R&D teams, overseas business, and operating assets currently dispersed within the group and related to Kling AI. At the same time, businesses unrelated to Kling will be spun off back to other entities of the Kuaishou Group.

If Kling AI fails to complete its listing by October 2031, investors will have the right to request a repurchase at the original investment amount plus an 8% simple interest per year on an annualized basis.

Meanwhile, Kuaishou also proposed that, starting from the completion of the restructuring, for at least the next five years, other entities primarily engaged in video generation model businesses will not be directly or indirectly controlled by the Kuaishou Group, except for Beijing Kling. In other words, Kling will become Kuaishou’s only video generation large model platform.

For Kuaishou, the biggest significance of spinning off Kling lies in unlocking the value of its AI business.

In the past, as Kling was an internal business of the Kuaishou Group, it was difficult for the capital market to price it separately. In the future, after independent financing and independent operations, its growth potential can be reflected more clearly, and it can also attract investors who focus on the AI field, paving the way for a subsequent IPO.

Video generation large models are widely regarded as “money furnaces,” and they also test capital endurance. Faced with heavy compute-power pressure and competing against rivals such as ByteDance, Alibaba, and Tencent, which have stronger financial resources, Kling AI’s spin-off from Kuaishou gives it a better chance to secure more funding support and ultimately fight and win the battle.

Unlike the past two years, which focused more on competing for large-model capabilities, the commercial return rate of AI products is now placed in a very important position. And Kling AI’s monetization appears to be relatively fast.

The announcement discloses that, assuming the restructuring is completed, Beijing Kling’s revenue in 2025 will be about RMB 1.1 billion; as of March 2026, Kling AI’s annualized revenue run rate has already reached about $500 million.

Kuaishou Technology founder and CEO Cheng Yixiao had previously said that, based on the current growth momentum and progress in commercialization, the company is highly confident that Kling AI will achieve revenue growth of more than double year-over-year in 2026.

However, for Kling AI, independence is only the first step. In the coming years, it not only needs to prove that it can continue to maintain globally leading video generation capabilities, but also needs to prove that it is an independent AI company capable of surviving through AI technology cycles and delivering long-term profitability.

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