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The China Securities Regulatory Commission (CSRC) recently announced rules for domestic companies considering overseas IPOs.
According to people familiar with the matter, Chinese cloud service provider Shenzhen Cloudsky Technologies is considering an initial public offering (IPO) where it could generate around $200 million. The sources revealed that the company’s plan to go public could happen as soon as this year. Currently, Shenzhen Cloudsky has not made a final decision on its listing locations, but informants said the US is one of the potential IPO venues.
Shenzhen Cloudsky Technologies Considers US IPO
As the company looks forward to its public debut, it has started liaising with advisers. If Shenzhen Cloudsky succeeds in the IPO, the company is seeking a $1 billion valuation. The sources noted that the public offering matter is still private and still in its early stage. Hence, the details are subject to change. However, if Shenzhen Cloudsky goes with a US listing, the company will join the growing list of Chinese companies filing IPO in the country. The recent drama with Didi intensified the effort of Chinese agencies to roll out laws guiding overseas listing.
The Cyberspace Administration of China (CAC) said Didi violated data security laws when it went live on the New York Stock Exchange (NYSE) in June 2021. The CAC accused the transport company of breaching national network security, personal information protection, and data security laws. This resulted in a fine of $1.19 billion for the company and an 18-month suspension in China.
Shenzhen Cloudsky specializes in Visual Cloud and was founded by talents from Sony Group Corp. and technology and entertainment conglomerate Tencent. The founding team also came from semiconductor corporation Intel (NASDAQ: INTC), Huawei Technologies, etc.
Shenzhen to Comply with New Laws on Overseas Public Offerings
The China Securities Regulatory Commission (CSRC) recently announced rules for domestic companies considering overseas IPOs. The Commission stated that all Chinese establishments must observe the national security measures before considering public offerings abroad. At the same time, they must ensure that they comply with the data protection law. As all new laws concerning overseas IPO become effective from March 31, underwriters are also required to report their involvement with international listings to the Commission. This means that Shenzhen Cloudsky may also have to observe the new laws if it decides to proceed with its US IPO.
In addition, the CSCR also stated the penalties for violating the rules for both individuals and organizations. Anyone who breaks the orders could face up to 10 million yuan ($1.5 million). This same consequence applies to companies and individuals that share misleading information with the public.