Chinese IPOs are coming back to the U.S.

Some Chinese companies start listing again in the US

Eduardo Munoz Alvarez | Corbis News | beautiful pictures

BEIJING – Chinese startups are raising millions of dollars to list on the US stock market, after a dry spell in the US. once hot market.

Hesai Corporation sell “lidar” technology for self-driving cars, listed on Nasdaq on Thursday. Shares are up nearly 11% at launch.

The company raised $190 million in its initial public offering, more than originally planned — and one of the biggest since ride-hailing giant Didi raised it. raised $4.4 billion in an IPO in June 2021. That listing was met with opposition from Chinese regulators, who ordered a cybersecurity review of Didi just days after public listing. Company delisted at the end of that year.

As of the end of 2022, only six China-based companies have issued US custody receipts in US IPOs since the collapse of Didi, according to Wind Information. Data shows that one of those companies, biotech company LianBio, raised $334.5 million in November 2021 — the largest amount to date since Didi went public.

But the dry period in Chinese IPOs in the US is beginning to end as companies become more regulated.

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A new regulation announced by the Chinese government requires internet platform operators with the personal information of more than 1 million users to apply for a cybersecurity assessment before they can list abroad.

On the US side, the Public Company Accounting Oversight Board (PCAOB) reached an agreement last year with China’s securities regulator and finance ministry to examine the audit papers of companies. China listed in the United States.

PCAOB said in mid-December that it had secured “full access”, removing the short-term risk of forcing Chinese companies to delist from US stock exchanges.

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Following the announcement, the online adult education company QuantaSing became the first China-based company to list in the US, Wind data shows.

Major investment banks Citigroup, CICC and CLSA were among the underwriters for the IPO, which raised $40.6 million. QuantaSing backers include Prospect Avenue Capital and Qiming Venture Partners.

Qiming also backs two other China-based companies that have issued ADRs this year: biotech companies Structure Therapeutics and Hesai.

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This year’s Hesai stock

The three companies, all of which are listed on Nasdaq, specified risk levels from US and Chinese regulators in their respective prospectuses:

  • Hesai, the company that sells technology to the Chinese automaker Automobiles and US companies, said they had received written confirmation from China’s cybersecurity regulator that they would not need to apply for a cyber assessment without the personal information of more than 1 person. million users.
  • QuantaSing said it has such user information and completed a cybersecurity assessment in August 2022.
  • Structure Therapeutics said it has not received any notice from Chinese regulators requiring the company to undergo a cybersecurity review.

The companies said US authorities may in the future determine that they are unable to complete reviews of their audit work, putting the companies at risk of being delisted.

If this first round of deals succeeds in pricing, I doubt it will open the floodgates.

Drawing Bernstein

Co-Chairman, Marcum Asia CPA LLP

In the near future, many Chinese companies are starting to prepare to list in the US

Drew Bernstein, co-chair of the accounting firm Marcum Asia CPA LLP, said on Thursday that his firm is working with about 50 companies – most of which are based in China – that plan to list in China. USA. “he say.

“If this first round of trading succeeds in pricing, I doubt it will open the floodgates,” Bernstein said.

However, he thinks it will take time for many IPOs to return to the market, especially as it is still difficult for people to get visas and travel in and out of China.

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