Horizon Robotics raises $696 million in biggest Hong Kong IPO of 2024

Last week, Horizon Robotics was in the spotlight with reports hinting at an upcoming IPO in Hong Kong. Now, that IPO has arrived. According to a term sheet seen by Reuters, the nine-year-old autonomous driving startup has priced its shares at the top of the expected range, raising HK$5.4 billion ($696 million). This marks the largest IPO in Hong Kong this year.

Horizon Robotics sold 1.355 billion shares, priced between HK$3.73 to HK$3.99 each, according to company filings cited by Reuters. The company did not comment on the IPO pricing.

The retail portion of the IPO was in high demand, covered 34 times over, according to a source familiar with the matter, signaling renewed interest in Hong Kong’s IPO market from individual investors.

This IPO surpasses China Resources Beverage’s $650 million share sale from just last Friday, making Horizon Robotics’ listing the biggest tech IPO in Hong Kong since SenseTime Group raised $740 million in late 2021.

These two recent deals have brought fresh optimism to dealmakers, who have been waiting for signs of life in Hong Kong’s IPO market, which has struggled over the past two years. Prior to these listings, IPO volumes had hit their lowest point in two decades, according to data from Dealogic. Last week saw Hong Kong’s busiest period for IPO activity in two years, thanks to the book-building phase of these two significant deals.

Of the funds raised, Horizon will allocate 70% toward research and development over the next five years, with 10% going toward sales and marketing efforts.

Four cornerstone investors, including Alisoft China and Baidu, signed up for $219.8 million worth of shares, according to regulatory filings. The deal was led by Goldman Sachs, Morgan Stanley, and China Securities International, Reuters reported.

IPO activity in Hong Kong had slowed significantly, with mainland Chinese companies facing regulatory hurdles that limited their offshore capital-raising efforts. But Horizon Robotics and China Resources Beverage signal a potential resurgence.

Major investors are showing interest in Horizon’s IPO, with $219.8 million worth of shares already committed. Leading the pack are Alisoft China and Baidu, each pledging $50 million.

Horizon Robotics, seen as a competitor to Nvidia, specializes in AI chips for robots and autonomous vehicles. The company’s success is also seen as a key step for China as it works to reduce dependence on Western technology, particularly advanced chipsets from the U.S. and Europe.

Back in 2022, we covered Horizon Robotics when Cariad, a software unit of Volkswagen, acquired a 60% stake in the company for $2 billion. The move was part of Volkswagen’s strategy to tackle software challenges and deepen its presence in the Chinese market.

Founded in 2015 by Dr. Yu Kai, a former director at Baidu’s Deep Learning Research Institute, Horizon Robotics provides tech for advanced driver assistance systems and autonomous driving in Chinese passenger vehicles.

Before the IPO, Horizon Robotics has raised over $1.3 billion to date. With two of the world’s leading semiconductor companies as major investors, the 7-year-old startup is making waves in the tech world.