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These IPOs align with the broader trend of Chinese companies seeking public listings in Hong Kong, driven by regulatory scrutiny and market dynamics.
Three prominent mainland China-based companies, led by Beijing Fourth Paradigm, a cutting-edge artificial intelligence (AI) software firm, have debuted on the Hong Kong Stock Exchange with initial public offerings (IPOs). Collectively, the companies plan to raise up to $280 million through the IPOs.
Fourth Paradigm completed the necessary procedures for its IPO on the Hong Kong Stock Exchange back in July and received the official green light from the China Securities Regulatory Commission (CSRC) to conduct the offerings after three previous failures. The approval comes after the financial regulator implemented fresh rules to enable offshore listings.
Fourth Paradigm Plans to Raise $144 Million
A few months after obtaining the regulatory approval, the company now leads two other Chinese firms to seek funding through traditional IPOs.
In this IPO, three cornerstone investors, led by New China Capital Management, have shown strong interest, subscribing for approximately $96.8 million worth of stock, accounting for roughly 70.6 percent of the total offering.
According to a Monday filing, Fourth Paradigm plans to secure up to $144 million by issuing 18.4 million shares at a price range of HK$55.60 to HK$61.16 each.
Launched in September 2014, Fourth Paradigm boasts various product offerings across different industries, including finance, retail, manufacturing, healthcare, energy, and telecommunications.
In 2021, the company completed its series D funding round, which saw participation from prominent financial companies such as Sequoia Capital, Goldman Sachs, China-UAE Joint Investment Fund, Mubadala Investment Company, and CDB Capital. These heavyweight investors contributed up to $700 million for the company.
Two years after the Series D fundraising, the company found itself in the U.S. “Entity List,” which imposed restrictions on U.S. suppliers from shipping technology to the company unless they could secure a license from the country’s Commerce Department.
Neusoft Xikang and ZX Seeks to Raise $135M in Hong Kong IPOs
In addition to Fourth Paradigm, another Chinese firm, Neusoft Xikang, a prominent cloud hospital platform, is targeting an IPO to raise between $81 million and $101 million by selling 133.8 million shares. The shares are priced in a range of HK$4.76 to HK$5.91 each.
Similarly, the third company in the IPO, ZX Inc, a mobile games operator, is offering 18.97 million shares priced between HK$11 to HK$14 each, intending to secure between $27 million and $34 million in funding.
The two companies aim to raise approximately $135 million in the IPO, bringing it to a total of $280 million with the planned $144 million raise by Fourth Paradigm.
These IPOs align with the broader trend of Chinese companies seeking public listings in Hong Kong, driven by regulatory scrutiny and market dynamics. Chinese firms are increasingly looking to tap into Hong Kong’s vibrant capital markets to fund their growth and expansion plans.
Meanwhile, these offerings mark an exciting chapter in the growth of the three Chinese companies and their foray into the international financial landscape. Investors and industry observers will closely watch their performance in the coming months as they navigate the dynamic IPO landscape in Hong Kong.