Zeekr, an electric vehicle brand under Chinese auto giant Geely, and WeRide, an autonomous driving upstart, have both received regulatory clearance to proceed with their planned initial public offerings (IPOs) in the US market. This development comes as China’s securities authority implemented new rules to tighten its oversight of Chinese companies seeking to sell shares abroad. Zeekr has been authorized to issue up to 926,074,300 common shares on the New York Stock Exchange, while WeRide is allowed to issue up to 159,045,000 common shares on either NYSE or Nasdaq [1].
Chinese IPO Market Faces Sluggish Growth and Regulatory Challenges
The Chinese IPO market has experienced a slowdown in recent quarters due to the implementation of stricter regulations by the securities authority. In the four quarters between Q3 2021 and Q2 2022, only six Chinese IPOs were recorded in the US. However, there are signs of a rebound, as Q1 of this year saw 13 Chinese IPOs in the US alone. The new listing rules emphasize data security, which is of particular concern for companies like Zeekr and WeRide, as they handle cross-border data flows [1].
Data Security Review and Importance of Cross-Border Businesses
Both Zeekr and WeRide are significant targets for China’s cybersecurity authority because of their international operations and potential exposure to data that crosses Chinese borders. Zeekr, with a valuation of $13 billion, aims to sell its electric vehicles globally, while WeRide, valued at $4.4 billion, conducts autonomous driving tests in both China and the US. Under the new overseas listing rules, Chinese companies must undergo a data security review with the relevant regulator before seeking approval for IPOs offshore. This requirement was introduced after a data probe into Didi, a ride-hailing giant, raised concerns about the handling of cross-border data and its implications for national security. The data security review has now become a standard procedure for all Chinese companies seeking IPOs offshore, including on the Hong Kong Stock Exchange [1].
Key Takeaway
- Zeekr and WeRide have obtained regulatory clearance for their planned IPOs in the US market.
- New rules implemented by China’s securities authority have slowed down Chinese IPO activity in the US market, but there are indications of a rebound.
- Data security is a crucial aspect of the new listing rules, and companies like Zeekr and WeRide, which handle cross-border data flows, must undergo a data security review.
The recent regulatory clearance granted to Zeekr and WeRide marks a significant step forward for Chinese companies navigating the new IPO landscape. As China aims to tighten its oversight of businesses seeking approval for offshore IPOs, data security emerges as a key consideration. The increased scrutiny on cross-border data flows reflects the country’s commitment to protecting national security and ensuring compliance with relevant regulations.
Sources:
- “With Beijing’s greenlight, mobility unicorns Zeekr and WeRide inch closer to US IPOs” – TechCrunch
