Tencent Holdings Ltd (>> Tencent Holdings Ltd) controls China Literature with a 62 percent stake. Private equity firm Carlyle Group LP (>> The Carlyle Group LP) owns 12.2 percent while Trustbridge Partners, a private equity firm founded by Shujun Li, the former CFO of Shanda Interactive, holds 6 percent.
According to a term sheet for the IPO seen by Reuters, China Literature and some of its shareholders are offering 151.37 million shares in an indicative range of HK$48 to HK$55 each.
The new shares will be equivalent to 16.7 percent of China Literature's enlarged share capital, with its market capitalisation expected to be up to $6.4 billion.
Tencent and China Literature did not immediately reply to a Reuters request for comment on the IPO terms.
The China Literature IPO is the latest in a series of high-profile technology listings in Hong Kong.
Last month, ZhongAn Online Property & Casualty Insurance Co's <6060.HK> hit the market with a $1.5 billion IPO.
And in coming days, Razer Inc, a gaming hardware maker backed by Intel Corp (>> Intel Corporation) and Hong Kong billionaire Li Ka-shing, is set to launch an IPO for up to $600 million.
China Literature has a business akin to Amazon.com Inc's (>> Amazon.com) Kindle Store, operating a platform with 9.6 million literary works from 6.4 million authors.
Bank of America Merrill Lynch, Credit Suisse and Morgan Stanley were hired as sponsors for the IPO, with China International Capital Corp Ltd (CICC) and JPMorgan also working as joint global coordinators.
(Additional reporting by Fiona Lau of IFR; Editing by Simon Cameron-Moore)
By Elzio Barreto