Chinese IPOs Are Coming Back to America

A handful of Chinese companies are starting to re-list in the US

Eduardo Munoz Alvarez | Corbis News | Getty Images

BEIJING – Chinese start-ups raise millions of dollars in US stock market listings again after drought once hot market.

Heisei Group, which sells “lidar” technology for self-driving cars, listed on Nasdaq on Thursday. Shares were up about 11% in the beginning.

The company raised $190 million in its initial public offering, more than initial plans — and one of the biggest listings since ride-hailing giant Didi raised $4.4 billion in its June 2021 IPO. That listing went before Chinese regulators, who ordered a cybersecurity review into Didi just days after its public listing. company was dropped later that year.

By the end of 2022, only six China-based companies had issued American Depositary Receipts in a US IPO since Didi’s collapse, according to Wind Information. One of those companies was biotech company Lianbio, which raised $334.5 million in November 2021 — the largest ever since its Didi listing, the data showed.

But the lull in Chinese IPOs in the US is starting to wear off as firms find greater regulatory clarity.

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A new rule Chinese authorities announced will allow internet platform operators with personal information of more than 1 million users to apply for a cyber security review before they can be listed overseas.

On the US side, the Public Company Accounting Oversight Board (PCAOB) entered into an agreement last year with China’s securities regulator and the Ministry of Finance to oversee audit work papers of Chinese companies listed in the US.

The PCAOB said in mid-December it had achieved “full access”, removing the near-term risk of Chinese companies being forced to delist from US stock exchanges.

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Following the announcement, the online adult education company quantizing Wind data shows that became the first Chinese company to be listed in the US.

Major investment banks Citigroup, CICC and CLSA were among the underwriters of the IPO, which raised $40.6 million. Backers for Qantasing included Prospect Avenue Capital and Qiming Venture Partners.

Kiming also endorsed two other Chinese companies that issued ADRs this year: biotech company Structure Therapeutics and Hesai.

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hesai stock this year

Three companies listed on Nasdaq specified their level of risk from US and Chinese regulators in their respective prospectus:

  • Hesai, which sells tech to Chinese automaker Lee Auto And the US companies said it has received written confirmation from China’s cyber security regulator that it will not need to apply for a cyber review if it does not have the personal information of more than 1 million users.
  • QuantaSing said it has such user information and completed a cyber security review in August 2022.
  • Structure Therapeutics said it has not received any notice from Chinese regulators requiring the firm to undergo a cyber security review.

The companies said that US authorities may determine in the future that they are unable to complete a review of audit work, putting the companies at risk of delisting.

If these first round deals are successful at pricing, I suspect it will open the floodgates.

Drew Bernstein

Co-Chairman, Marcum Asia CPA LLP

Looking ahead, more Chinese companies are starting to prepare for listing in the US

Drew Bernstein, co-chairman of audit firm Markum Asia CPA LLP, said Thursday that his company is working with about 50 companies — mostly China-based — that plan to list in the US. ,” They said.

“If these first round deals are successful at pricing, I suspect it will open the floodgates,” Bernstein said.

However, he expects many IPOs to take time to return to the market, especially since it is still difficult for people to obtain visas and travel in and out of China.

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