Chinese drone maker DJI seeking at least $500 mln in funds -sources (updated)
22/03/2018 04:07
* DJI valued at $15 billion in new funding round -sources
* Aims to expand into drones for farm, energy, building
sectors
* Looking at IPO in Hong Kong or mainland China in 2019
-sources
(Adds risks to its business, main competitors)
By Fiona Lau and Julie Zhu
HONG KONG, March 22 (Reuters) - China's SZ DJI Technology Co
Ltd, the world's largest maker of non-military drones, is in
talks with investors for at least $500 million in funding ahead
of a planned stock market debut, people with knowledge of the
matter said.
With the funding, set to be obtained via a combination of
new equity and debt, the firm would be valued at about $15
billion, nearly double its valuation in 2015, they said.
The move seeks to capitalise on robust investor enthusiasm
for Chinese tech stocks which have pushed valuations to heady
levels for many firms, as well as on rapid growth in demand for
commercial-use drones.
Shenzhen-based DJI plans to expand into drones for sectors
such as agriculture, energy, construction as well as drones for
use in infrastructure inspection, two of the three people said,
declining to be identified as the information was private.
Proceeds from the fundraising could be between $500 million
and $800 million, one person said.
DJI, which commands 70 percent of the global commercial and
consumer drone market, wants to finalise the deal in the coming
months while a stock market listing either in Hong Kong or
mainland China would likely take place next year, they added.
But there are also risks to its business, with U.S.
President Donald Trump set to announce tariffs on Chinese
imports on Thursday. urn:newsml:reuters.com:*:nL1N1R30YH
Drone technology tends to spark extra scrutiny due to
concern the unmanned aircraft may be used to capture sensitive
information.
DJI made headlines in 2015 when its one of its top-selling
consumer drones, the Phantom, crashed into the White House lawn
and last August, the U.S. Army ordered its members to stop using
DJI drones because of "cyber vulnerabilities". DJI has since
tightened data security on its drones. urn:newsml:reuters.com:*:nL2N1L01RL
A spokeswoman for DJI said in an emailed statement the
company had no announcement to make on fundraising and that it
was not planning an initial public offering at the moment. She
did not elaborate.
DJI was valued at about $8 billion in 2015 when it raised
$75 million from Silicon Valley venture capital firm Accel
Partners. Its valuation increased to $10 billion last year, said
one person.
Founded by Chief Executive Frank Wang in 2006, DJI is also
backed by Sequoia Capital China. It is the world's top consumer
drone maker by revenue and in January its president, Roger Luo,
was quoted by media as saying that 2017 sales were likely to
have exceeded 18 billion yuan ($2.9 billion).
DJI booked about 5 billion yuan in profit last year, said
one of the people with knowledge of the fundraising.
Its competitors include China's Yuneec, which is backed by
Intel INTC.O , France's Parrot PARRO.PA and units of Boeing
BA.N and Lockheed Martin LMT.N .
Global spending on drones is likely to reach $9 billion this
year and is expected to grow at a compound annual growth rate of
30 percent in the next five years, according to research firm
IDC, which estimates more than half of that spending will be on
drones for commercial use.
Online technology publication The Information first reported
some details of DJI's latest fundraising plans on Tuesday.
($1 = 6.3216 Chinese yuan)
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BREAKINGVIEWS-Chinese drone giant DJI charts a risky flight path
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(Reporting by Fiona Lau of IFR and Julie Zhu in HONG KONG;
Additional reporting by Sijia Jiang; Editing by Sumeet
Chatterjee and Edwina Gibbs)
((julie.zhu1@thomsonreuters.com; +852 2843 6519; Reuters
Messaging: julie.zhu1.thomsonreuters.com@reuters.net))