Chinese internet platform Sina has picked banks for a spin-out of its Twitter-like micro-blogging service Weibo, the latest in a rash of high-profile deals in the tech sector.
Sina is looking to raise about $500 million through the deal, which is expected to complete in the second quarter.
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Last year Alibaba, China's dominant ecommerce platform, paid $586 million for an 18 percent stake in Weibo, valuing the group at $3.3 billion.
However, since then Sina's share price has risen by about one-third, giving it a current market capitalisation of $4.9 billion. Barclays analysts believe that Weibo alone is worth $4.1 billion, while JPMorgan values it at roughly $5 billion.
Sina is due to report its fourth-quarter earnings after the close of trading on Monday in New York.
Internet stocks have been a bright spot for investors looking to build China exposure in the past year. Tencent, which owns a Whatsapp-like messaging system called WeChat, has seen its shares more than double in the past 12 months.
That surge helped it overtake McDonald's, Boeing and Cisco in terms of market capitalisation, which now stands at almost $140 billion.
Investors are also eager to see whether Alibaba pushes ahead with a planned listing. Both New York and Hong Kong are in the running to host the deal, which is likely to value the company at more than $100 billion.
Activity in the tech sector is roaring at the start of the year, providing a boost to equity markets globally. Following Facebook's $19 billion purchase of Whatsapp last week the value of tech deals has now reached $50 billion, making it the busiest start to the year since 2000, the height of the dotcom bubble.
The listing comes at a tricky time for Weibo. Active users of microblogs in China fell by a tenth between 2012 and 2013, according to a recent report by a government-affiliated research group.
Censorship has played an important role in that reversal. The Chinese government has cracked down on outspoken bloggers, known as "Big Vs" for the verification sign on their user profiles. Weibo has also faced increased competition from Tencent's WeChat app.
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Other social media companies have also run into trouble recently. Shares in Twitter were hit earlier this month after it reported less than 4 percent growth in user numbers during the fourth quarter. LinkedIn also fell sharply after it gave a subdued outlook for 2014 during its earnings report.
Sina said it did not comment on market rumours. Goldman Sachs and Credit Suisse both declined to comment.
Additional reporting by Sarah Mishkin in San Francisco and Arash Massoudi in New York