With Beijing’s greenlight, mobility unicorns Zeekr and WeRide inch nearer to US IPOs

Six months in the past, China’s securities authority introduced a set of latest guidelines to facilitate abroad IPOs of Chinese language firms, permitting Beijing to tighten its grip on companies searching for to promote shares overseas. Since then, firms have dedicated themselves to assembly these new necessities, and now information is surfacing that some have managed to obtain regulatory clearance on this new period.

Amongst them are Zeekr, a younger but well-financed electrical automobile model below the Chinese language auto big Geely, and WeRide, an autonomous driving upstart that has raised over $1 billion in funding.

The brand new coverage tremendously slowed down the tempo of Chinese language IPOs within the U.S., which totaled solely six for the 4 quarters between Q3 2021 and Q2 2022, in accordance with monetary knowledge aggregator Wind. There are indicators of a rebound, as Q1 this yr recorded 13 Chinese language IPOs within the U.S. alone.

Zeekr has obtained the greenlight to problem as much as 926,074,300 frequent shares on the New York Inventory Change, in accordance with an announcement from the China Securities Regulatory Fee. A separate discover from CSRC stated WeRide has been allowed to problem as much as 159,045,000 frequent shares on both NYSE or Nasdaq.

One focus of the brand new itemizing guidelines is round knowledge safety. Each firms are probably dealing with knowledge that flows throughout China’s borders. Zeekr, whose valuation has surged to $13 billion in simply two years, has bold plans to promote its EVs internationally; WeRide, final valued at $4.4 billion, is without doubt one of the uncommon autonomous driving firms conducting street exams in each China and the U.S.

Their cross-border companies make them vital targets of China’s cybersecurity authority. In line with the brand new abroad itemizing guidelines, in sure circumstances, firms should endure a knowledge safety evaluate course of with the related regulator earlier than even searching for approval from the securities authority.

You would possibly recall, in mid-2021, China initiated a knowledge probe into Didi shortly after the journey hailing big floated its shares within the U.S., citing considerations over the corporate’s dealing with of cross-border knowledge that might pose a threat to China’s nationwide safety. The pre-filing knowledge safety examine then emerged after the Didi incident and has now grow to be a normal process for any Chinese language agency searching for IPOs offshore, together with on the Hong Kong Inventory Change.

As we wrote on the time:

A memo of an “professional assembly” shared amongst Didi’s traders, which TechCrunch reviewed, stated the ride-hailing agency had didn’t guarantee Beijing its knowledge practices have been safe earlier than going public in New York. A significant concern was that Didi’s knowledge, if unguarded by Chinese language legal guidelines, might be topic to scrutiny by U.S. regulators. However a Didi govt claimed that the agency saved all its China knowledge regionally and it’s “completely not potential” that it handed knowledge to the U.S.

The safety evaluate applies to a variety of firms, together with these whose prime administration contains principally Chinese language residents, no matter whether or not they generate revenues in China, and community operators with over a million Chinese language person knowledge — which is a straightforward threshold to cross contemplating the nation’s one-billion web inhabitants. Whereas some firms have the monetary and authorities sources to fulfill the brand new strict guidelines, others have chosen the decoupling path as they provide up their residence market and search international passports, as we beforehand reported.