Chinese Companies Returning To The US With IPOs

After a dry spell in the formerly brisk market, Chinese startups are once again raising millions of dollars through listings on the American stock market.

Hesai Group, a supplier of “lidar” technology for autonomous vehicles, listed on the Nasdaq on Thursday. In their debut, shares increased by almost 11%.

In excess of initial projections, the company raised $190 million in its IPO, making it one of the largest listings since ride-hailing giant Didi raised $4.4 billion in its IPO in June 2021. Just days after Didi’s public listing, Chinese regulators responded to the listing by ordering a cybersecurity review of the company. The following year, the company delisted.\\

According to Wind Information, only six China-based businesses had issued American depositary receipts in U.S. IPOs since the Didi controversy as of the end of 2022. One of them was the biotech firm LianBio, which according to the data raised $334.5 million in November 2021, the largest sum since Didi’s IPO.

However, as businesses gain more regulatory clarity, the dry spell in Chinese IPOs in the United States is beginning to end.

Internet platform operators with personal data of more than 1 million users must apply for a cybersecurity review before they can list abroad, according to a new rule that Chinese authorities have announced.

To inspect the audit work papers of Chinese companies listed in the US, the Public Company Accounting Oversight Board (PCAOB) in the US reached an agreement with China’s securities regulator and finance ministry last year.

The PCAOB declared in mid-December that it had obtained “complete access,” eliminating the risk of Chinese companies being forced to delist from U.S. stock exchanges in the near future.

For the IPO, which raised $40.6 million, notable investment banks Citigroup, CICC, and CLSA were among the underwriters. Prospect Avenue Capital and Qiming Venture Partners were among QuantaSing’s backers.

Qiming also provided support to Hesai and Structure Therapeutics, two other Chinese businesses that released ADRs this year.

The three companies, which are all Nasdaq-listed, detailed in each prospectus the degree of risk from Chinese and American regulators:

Hesai, which provides technology to Li Auto, a Chinese automaker, and American businesses, claimed to have received written assurance from China’s cybersecurity watchdog that it would not be required to request a cyber review if it did not possess the personal data of more than 1 million users.

Such user data, according to QuantaSing, was the subject of a cybersecurity review that was finished in August 2022.

According to Structure Therapeutics, it has not received any notification from Chinese regulators requiring the company to undergo a cybersecurity review.

The companies warned that delisting could occur if U.S. authorities later found that they were unable to complete reviews of audit work.

In the near future, more Chinese businesses are starting to get ready for American listing.

According to Drew Bernstein, co-chairman of auditing firm Marcum Asia CPAs LLP, his business is collaborating with about 50 companies, most of which are based in China and have plans to list in the United States. According to him, it’s “likely the strongest pipeline our company has ever had.”

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

However, he anticipates that it will take some time before many IPOs return to the market, particularly given how challenging it is for people to obtain visas and leave and enter China.

(Adapted from

Categories: Economy & Finance, Entrepreneurship, Geopolitics, Regulations & Legal, Strategy

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