Hesai Group rises in U.S. IPO, biggest for Chinese firm since 2021 (updated)

Hesai

10/02/2023 05:26

(Adds banker comment in paragraphs 14, 15)
    By Scott Murdoch and Echo Wang
       NEW YORK, Feb 9 (Reuters) - Chinese sensor maker Hesai
Group's  HSAI.O  shares closed 10.8% percent higher on their
first day of trade in New York after it raised $190 million in
an upsized initial public offering (IPO), the largest U.S. deal
by a mainland Chinese company in more than a year. 
    The company sold 10 million American depository receipts
(ADRs) at $19 apiece, according to its regulatory filings, and
shares closed at $21.05.
    Shanghai-based Hesai produces laser-based components
essential for autonomous driving systems, known as lidar
sensors.
    The deal is the biggest from a Chinese company selling
shares in New York since LianBio  LIAN.O  raised $334 million in
October 2021, according to Refinitiv data.
    "We always wanted to be able to compete at the global stage,
not only on the product, but also on the capital side," Hesai's
co-founder and CEO, Yifan "David" Li, told Reuters.
    Chinese company listings in the United States ground to a
halt in 2021 after the debut of ride hailing giant Didi Global
Inc  92Sy.MU  in June of that year.
    Days after Didi went public, China's powerful internet
watchdog, Cyberspace Administration of China (CAC), launched a
cybersecurity probe into the company's data practices and
ordered app stores to remove 25 mobile apps operated by Didi. 
    As a result, Chinese listings in the United States dwindled
and mainland regulators also moved to draw up new guidelines
governing companies selling shares overseas.
    The final rules are yet to be published by the China
Securities Regulatory Commission (CSRC). 
    China also announced in January 2022 that platform companies
with data on more than 1 million users would require CAC's
sign-off before listing overseas.
    "Unfortunately, there were a lot of regulatory concerns from
last year that it became challenging for anybody to list. And I
feel like most of those concerns are gone", said Li, adding,
"investors are pretty confident and somewhat bullish about our
business."   
    Chinese companies raised nearly $230 million in U.S.
listings in 2022, according to Refinitiv data, representing a
massive drop from $12.85 billion a year earlier.
    However, advisers are hoping that China's reopened borders
and the government's renewed focus on reviving economic growth
could prompt more capital raisings. 
    "This could definitely open up the ADR market," said Nora
Yeung, co-head of Asia Pacific ECM origination at Credit Suisse,
which led the Hesai IPO.
   "After the pricing of this deal, we have had a lot of reverse
enquiries from the corporate side who want to hear about the
process and for those who had been in the pipeline they would
think that this would give them a renewed window for them to tap
the ADR market."
    The U.S. accounting watchdog said in mid-December that it
had full access to inspect and investigate firms in China for
the first time, reducing the prospect of Chinese companies in
the United States being delisted over accounting issues.
 (Reporting by Scott Murdoch in Sydney and Echo Wang in New
York; Editing by Jamie Freed)
 ((Scott.Murdoch@thomsonreuters.com;))