Horizon Robotics, a prominent Chinese supplier of software and hardware solutions for self-driving cars, is expected to attract heavyweight investors in its planned IPO in Hong Kong.
Sources have revealed that the two professional and technical giants of Alibaba Group Holding and Baidu in China will have an offering that shows their long-term vision in strategic industries like artificial intelligence, self-driving, and other high technologies.
Other cornerstone investors said to be involved are CMA CGM from French shipping tycoon Rodolphe Saade and a government-funded fund from Ningbo. These four investors have also offered to take up shares that amount to US$220 million, making a huge chunk of the IPO, which may potentially raise US$800 million for Horizon Robotics.
This makes the IPO one of the largest in Hong Kong this year. Founded in 2015, the company targets a valuation of up to $6 billion, disregarding funds from the IPO.
Horizon Robotics has attracted various investors, including Chinese new energy automobile manufacturer BYD and battery maker Contemporary Amperex Technology Co Ltd (CATL), who invested in it earlier. As fully autonomous driving systems are expected to emerge as one of the major and major emerging themes in China's automotive industry in the future, Horizon Robotics' market has sparked great interest from many corporate players and institutional investors.
The IPO is viewed as a step in Horizon Robotics' strategic development plan to expand the business and leverage the market's potential for intelligent vehicles. The company has recently initiated a joint venture, Carizon (Beijing) Technology, with German automaker Volkswagen in 2023 to offer tailor-made driving automation in the Chinese market. This partnership can be considered a key development stage in Horizon Robotics' ambitious plans to take over the Chinese autonomous driving market.
However, similar to most start-ups reflecting fab's strategies, Horizon Robotics has had financial problems. In the first half of 2024, the company posted a consolidated net loss of 5.1 billion yuan (S$941 million), which is significantly worse than the 1.9 billion yuan in consolidated net loss of the same period of the preceding year. The increased losses were attributed to the rising cost of research and development. However, revenue for the same period saw a substantial rise, increasing by 152% to 935 million yuan.
For years, Horizon Robotics has been planning for this IPO, with it having eyed an initial public offering even as early as 2021. However, despite the current economic downturn in China, the company is betting that market conditions and investor appetite are such that it can now proceed with the offering. Although deliberations about the IPO are ongoing, the final size of the offering, for example, can still change before the work is over.