Chinese Firms Still Face Multiple Challenges to List in US Despite Hesai’s Success

Leading Chinese lidar firm Hesai Technology listed on the Nasdaq on February 9, an example of more Chinese enterprises going public in the United States this year. However, according to IPO Zaozhidao‘s report, it was not easy for Hesai to get listed and Chinese companies will still face many challenges when seeking a US listing this year.

Since June 30, 2021, Hesai is the first listed company in the US with a fundraising scale exceeding $100 million. The final issue of Hesai was oversubscribed by about 20 times, with extensive participation of high-quality long-term funds and hedge fund investors from Asia, Europe and the US.

According to the prospectus, Louis Hsieh, the former CFO of well-known automaker NIO, joined Hesai as CFO in April 2021. This means that Hesai may have started the US listing plan at that time. According to the US Securities and Exchange Commission (SEC), on July 2, 2021, Hesai submitted its DRS documents.

According to the usual rhythm of listing in the US, Hesai was expected to be listed before the end of 2021. According to many investors and investment bankers, due to geopolitical factors, market sentiment and other reasons, the process was delayed.

It was not until the end of 2022 that the manuscript audit issue between China and the US was resolved that Hesai and various investment banks began to communicate with investors again.

An investment banker close to the project admitted that although this issue was successful, it still encountered huge challenges in the process as it was the first large, market-oriented issuance project in some time.

“Usually, before we start a project, the visibility is relatively clear, but not this time.” The investment banker added, “We have done a lot of preparatory work and constantly communicated with investors. We can only try to quantify the qualitative part after carefully evaluating and judging it. This kind of project tests the level of investment banks.”

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In fact, a US listing for Chinese companies is still recovering. New Ruipeng Pet Healthcare Group, which submitted F-1 documents to the SEC one week later than Hesai, has suspended its listing process. The reason may be that it is not satisfied with the current valuation given by the market.

In the past two years, with more models equipped with advanced auxiliary driving functions, lidar has changed from a research and development tool in the hands of automatic driving engineers to a new configuration that ordinary car buyers are familiar with. Hesai is the beneficiary of this change, but it is still operating at a loss. It is building a new factory in Shanghai to expand its production capacity to reach 1.2 million units in the second half of this year. It hopes to reach an annual delivery of more than one million units in 2025. Yole, a market research company, predicts that 20 million smart electric vehicles will be sold worldwide in 2025, and 3.8 million lidars will be shipped. Hesai’s target means a 26% market share.