Kling AI nears $3bn round at $18bn valuation with Tencent backing
Synopsis
Kuaishou's AI video spinoff Kling AI is closing a $3 billion round at an $18 billion valuation — down from a $20 billion April target — with Tencent on board and a Hong Kong IPO expected within 12 months, signalling a fierce new phase in China's generative video race.
Key Takeaways
Kling AI is nearing a US$3 billion fundraising round at a post-investment valuation of US$18 billion , according to sources.
The valuation was revised down from an initial US$20 billion target set in April 2026 , reflecting shifting market sentiment.
Tencent is among the investors participating in the current fundraising round, a source said.
Kuaishou Technology disclosed on May 12, 2026 via a Hong Kong Stock Exchange filing that it was assessing a restructuring proposal for Kling AI .
A Hong Kong Stock Exchange IPO for Kling AI is expected to begin within the next 12 months , with proceeds targeting compute, data centres, and talent.
Kuaishou 's Hong Kong shares closed up 1.46 per cent at HK$41.60 (US$5.30) on Wednesday, July 1, 2026 .
Kling AI, the video-generation spinoff of Beijing-based Kuaishou Technology, is close to closing a US$3 billion fundraising round at a post-investment valuation of US$18 billion, according to people familiar with the matter. The deal, which counts Tencent among its backers, marks a significant milestone in China's intensifying race to dominate AI-powered video creation.
Valuation trimmed from initial target
The US$18 billion post-money valuation represents a step down from the US$20 billion target set in April 2026, when Kuaishou first floated plans to spin off Kling AI, according to a source familiar with the discussions. The revision reflects shifting market sentiment around the company, the source noted. Despite the haircut, the round — if completed at the reported size — would rank among the largest single fundraises in the global AI video sector to date.
Tencent joins as a key investor
Tencent, the Chinese video-gaming and social-media conglomerate, is among the investors backing the current round, a separate source said. The participation of Tencent adds strategic weight to the raise, given the company's extensive distribution infrastructure across messaging, short video, and cloud services. Kuaishou, Kling AI, and Tencent did not immediately respond to requests for comment.
IPO on the Hong Kong exchange within 12 months
Kuaishou disclosed in a May 12 filing with the Hong Kong Stock Exchange that it was 'assessing a proposal to restructure' Kling AI in a manner that could involve raising funds from external investors. A source close to the deal said the company expects to commence Kling AI's Hong Kong Stock Exchange listing process within the next 12 months. Proceeds from the initial public offering are earmarked for computing infrastructure, data-centre buildout, and talent acquisition and retention.
Why it matters: the competitive backdrop
Kling AI competes in a crowded field that includes ByteDance's Seedance and US-based Runway, as demand for AI-generated video accelerates across entertainment, advertising, and social media. Kuaishou itself operates in the Chinese short-video market alongside Douyin, the domestic version of TikTok, giving Kling AI a built-in distribution advantage. Kuaishou Technology's Hong Kong-listed shares closed up 1.46 per cent at HK$41.60 (US$5.30) on Wednesday, July 1, 2026.
What's next
The completion of the funding round and the timeline for a Hong Kong IPO will be closely watched by investors tracking the commercialisation of generative AI in Asia. A successful listing would test public-market appetite for pure-play AI video companies at a moment when global valuations in the sector remain volatile. How Kling AI deploys capital into compute and data infrastructure will also signal how aggressively it intends to challenge international rivals.
Point of View
A distinction that carries enormous implications for how China's next wave of AI spinoffs raise capital.
NationPress
1 Jul 2026
Frequently Asked Questions
What is Kling AI and who owns it?
Kling AI is an artificial intelligence video-generation company backed by Kuaishou Technology , the Beijing -based short-video platform that competes with Douyin in China . Kuaishou is in the process of spinning Kling AI out as a separate entity and raising external capital for it.
How much is Kling AI raising and at what valuation?
Kling AI is reportedly close to closing a US$3 billion fundraising round at a post-investment valuation of US$18 billion . This is below the original US$20 billion target set in April 2026 , according to sources familiar with the matter.
Why is Tencent investing in Kling AI?
Tencent is among the investors backing Kling AI 's current fundraising round, a source said, though neither company has officially confirmed the investment. Tencent 's participation would give the gaming and social-media giant strategic exposure to AI-generated video at a time when the sector is growing rapidly.
When will Kling AI go public on the Hong Kong Stock Exchange?
Kling AI is expected to begin its Hong Kong Stock Exchange listing process within the next 12 months , according to a source close to the deal. IPO proceeds are intended to fund computing infrastructure, data centres, and talent acquisition.
Who are Kling AI's main competitors?
Kling AI operates in a competitive AI video-generation market that includes ByteDance 's Seedance in China and Runway in the United States . The sector is seeing rapid investment as demand for AI-created video content grows across entertainment, advertising, and social platforms.
