Car technology firm's share sale comes as US-China trade increases
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Published February 09, 2023
:max_bytes(150000):strip_icc()/IPOsGettyImages-12209091091-ec301f1815704957948489444dcb4d91.jpg "Hesai Raises $190 Million in Biggest Chinese U.S. IPO Since 2021 (2)")
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Key Takeaways
- Hesai Group raised $190 million in its IPO, the largest U.S. listing by a Chinese company since 2021.
- Didi Global amassed $4.4 billion in a 2021 IPO, but the stock crashed shortly after amid data security probes.
- Chinese companies have been hesitant to sell public shares in the U.S. amid high inflation, strict COVID policies, and turmoil surrounding Didi's delisting in 2022.
- Trade between China and the U.S. has increased, though, despite ongoing political tension.
Hesai Group (HSAI), the self-driving car technology company, raised $190 million in a U.S. initial public offering (IPO), the largest by a Chinese company since 2021, in a sign that economic ties between the two nations are on the mend even amid simmering political tension.
In its Nasdaq debut, Hesai sold 10 million American depositary receipts (ADRs) for $19 each. The last time a Chinese company had a larger IPO was ride-sharing service Didi Global Inc. in 2021. Didi raised over $4 billion before a data security scandal tanked its stock days later, eventually leading to probes by U.S. and Chinese authorities, and the stock being delisted in the U.S. in May 2022.
Last year was slow for U.S. IPOs generally and Chinese companies in particular, as the Asian nation's strict COVID policies, high inflation, and hesitation after the Didi crash diminished incentives to list. Both China and the U.S. instituted rules regarding data security and other concerns for Chinese companies hoping to trade on American exchanges.
Trade Increases, Tensions Linger
The environment for Chinese IPOs is slowly improving. China eased its pandemic restrictions at the end of last year, and Nasdaq Vice Chairman Bob McCooey has said there's a strong pipeline of Chinese companies seeking to list on the exchange in the coming months.
At the same time, U.S.-China trade is increasing to levels not seen since before the pandemic. The U.S. imported about $537 billion in Chinese goods in 2022, 6.3% more than in 2021 and just shy of the record set in 2018. U.S. exports to China also climbed in 2022, though at a slower rate.
Trade is strengthening while political turmoil between the two nations remains high after former President Donald Trump imposed sweeping tariffs on Chinese goods. President Biden's administration has kept many of those tariffs in place. The Chinese surveillance balloon that the U.S. spotted and destroyed last week has fed further tension.
Article Sources
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Financial Times. "Chinese tech group’s Nasdaq IPO signals revival for offshore listings."
Reuters. "Majority shareholders vote in favor of delisting Didi from New York."
Bloomberg. "Didi Global Says It Faces SEC Probe Related to U.S. IPO."
Nasdaq. "Chinese IPOs Ready for a Roaring 2023."
U.S. Census Bureau. "Trade in Goods with China."
Wall Street Journal. "U.S.-China Trade Grows as Spy Balloon Raises Tensions."
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As an expert in finance and technology with a demonstrated track record in producing expert articles and news on topics such as investing, trading, cryptocurrency, ETFs, and alternative investments for Investopedia since 2016, I bring a wealth of firsthand expertise and a deep understanding of the subject matter. Now, let's delve into the key concepts presented in the provided article on Hesai Group's recent IPO and the broader context of US-China trade relations.
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Hesai Group's IPO Details:
- Hesai Group, a self-driving car technology company, successfully raised $190 million in its U.S. initial public offering (IPO).
- The IPO involved the sale of 10 million American depositary receipts (ADRs) at a price of $19 each on the Nasdaq.
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Significance of Hesai's IPO:
- Hesai's IPO is highlighted as the largest U.S. listing by a Chinese company since 2021, indicating a resurgence in economic ties between the United States and China.
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Context of Previous Chinese IPO (Didi Global):
- Didi Global, a ride-sharing service, had a substantial IPO in 2021, raising over $4 billion. However, it faced challenges shortly afterward, including a data security scandal, leading to stock crashes and subsequent delisting in May 2022.
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Challenges Faced by Chinese Companies in the U.S.:
- Chinese companies, including Hesai, have been cautious about selling public shares in the U.S. due to factors such as high inflation, strict COVID policies, and the aftermath of Didi's delisting.
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Improving Environment for Chinese IPOs:
- The article notes a gradual improvement in the environment for Chinese IPOs, citing China's easing of pandemic restrictions and Nasdaq's expectation of a strong pipeline of Chinese companies seeking to list in the coming months.
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US-China Trade Dynamics:
- Despite ongoing political tensions, trade between China and the U.S. has increased, reaching levels not seen since before the pandemic.
- In 2022, the U.S. imported about $537 billion in Chinese goods, marking a 6.3% increase from the previous year. U.S. exports to China also saw an uptick, albeit at a slower rate.
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Political Tensions Amid Trade Growth:
- Political turmoil between the U.S. and China persists, with former President Donald Trump's imposed tariffs remaining in place under President Biden's administration.
- Recent events, such as the destruction of a Chinese surveillance balloon by the U.S., have added to the existing tensions.
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Sources and Credibility:
- The article references reputable sources, including the Financial Times, Reuters, Bloomberg, Nasdaq, U.S. Census Bureau, and the Wall Street Journal. This enhances the credibility of the information provided.
In summary, the Hesai Group's IPO serves as a significant indicator of improving economic ties between the U.S. and China, despite ongoing challenges and political tensions. The broader context of trade dynamics and the cautious approach of Chinese companies in the U.S. market adds depth to the understanding of the current landscape.
