The Shanghai-based car sensor maker has become the biggest Chinese group to go public in the US from 2021, in a deal executives hope will ease tensions for nearly two years when the listing ends.
Hesai Technologies, which supplies laser-based sensors to automakers and autonomous driving companies, on Wednesday raised $190 million from investors – more than planned – in an initial public offering on the Nasdaq stock exchange valued at about $2.4 billion.
Bob McCooey, head of Asia-Pacific at Nasdaq, said he hoped the deal would be a “seminal” event after several positive developments in recent months “dispelled the dark clouds. [that] hanged on US capital markets for Chinese companies”.
More than 200 Chinese companies worth a combined $1tn are listed on US exchanges, according to the US-China Economic and Security Review Commission, a group created by Congress to examine the national security implications of trade and economic relations between the two countries.
China has been the dominant source of foreign listings in the US in recent years and a lucrative source of income for US exchanges, but rising political tensions, regulatory disputes and the $4.4bn listing of ride-hailing group Didi Chuxing led to its demise. trends in 2021.
Didi was forced to withdraw less than 12 months after debuting on the New York Stock Exchange, amid a series of Chinese regulatory probes that have saddled investors with billions of dollars in losses.
A stand-off between Beijing and Washington over the supervision of Chinese companies’ audit also threatened hundreds of companies will force delisted, but the findings have been reached at the end of December.
Hesai became the first Chinese company to raise more than $100 million in the US since October 2021, according to Dealogic data, and the largest Chinese technology group to list in New York since Didi.
The deal also marks the return of some of the biggest western banks to the US-China deal, with Goldman Sachs, Morgan Stanley and Credit Suisse all providing their first guarantees from 2021, according to Dealogic.
“With three of the main players in the Asian region all this IPO, I think that bodes well,” McCooey said.
He said he expects the new regulatory clarity and recent stock price improvement to create “opportunities for a deep pipeline. [of IPO candidates] which has existed since before the middle of 2021 and [that] has continued to develop”.
Nasdaq’s Golden Dragon Index, which tracks shares in US-listed Chinese companies, has risen 66 percent since the end of October, boosted by the end of delisting threats and China’s re-emergence of a zero-Covid strategy.
It is unlikely that there will be many further deals in the first quarter, as next Tuesday marks the last day for the company to go public without providing updated financial figures, but McCooey predicts “you will see more in the second quarter and as the year progresses.”.
The Financial Times reported last month that Shein, the Chinese fast fashion giant, expects to list in the US starting this year.
Still, while the outlook is improving, some remain cautious. “I think we’re going to see some smaller and medium ones [deals], but for something bigger. . . they must have very strong reasons not to enter Hong Kong. . .[and]must ensure that they have a strong understanding of government sentiment” to avoid a repeat of Didi’s failure, said a trader working on the IPO.
Hesai’s prospectus also warned that even if the threat of delisting from the US audit regulator has been lifted now, it will likely have to make the same decision every year in the future. The company also noted that during the preparations for the listing suffered from a “lack of sufficiently skilled staff” with knowledge of US accounting requirements.
Describing itself as a “global leader” in lidar technology, which is used for driver assistance systems such as parking sensors as well as advanced autonomous vehicles, Hesai reported a profit of Rmb793mn ($112m) in the first nine months of 2022 and a net loss of Rmb165jt.
Current shareholders include Chinese internet group Baidu, China-focused venture firm Lightspeed and German auto parts specialist Bosch.