One of the largest fundraisings by a Chinese company on U.S. markets so far this year took place last month, bringing in over $400 million. Yet the firm in question might never sell any of its products in America.
Guangzhou-based firm WeRide, which specializes in robotaxis and other self-driving vehicles, raised $120 million in its IPO on the Nasdaq exchange, and an additional $320 million in a concurrent private placement.
Industry investors pounced on the offering: German auto parts manufacturer Robert Bosch GmbH bought more than 83 percent of the IPO shares. Alliance Ventures, the venture-capital arm of the Renault-Nissan-Mitsubishi partnership, purchased $97 million worth of the private placement, more than any other investor.
Their enthusiasm is in spite of the fact that WeRide has only ever generated revenue in China, according to Pitchbook. That’s unlikely to change much: The U.S. is currently finalizing rules to prohibit cars made with Chinese software or hardware from driving on American roads, and Europe is considering similar measures. In its IPO prospectus, WeRide acknowledges that “we have not offered and do not plan to offer any services or products to the U.S. markets.”
Even so, WeRide has gone ahead with a U.S. listing. This isn’t as unusual as it seems, says Drew Bernstein, co-chairman of advisory firm MarcumAsia. American exchanges offer deep wells of dollar-denominated capital that Chinese markets do not, he notes.
“The U.S. markets are the gold standard for all companies,” Bernstein says. “If they can go public in the United States, that would normally be their first choice.”
Indeed, WeRide is one of more than two dozen Chinese firms to list on New York exchanges this year —fellow autonomous vehicle company Zeekr scored the largest IPO among them, raising $441 million in its May debut. Overall, more Chinese companies have listed on Nasdaq and the New York Stock Exchange in 2024 than in any year since rideshare giant Didi Chuxing’s disastrous delisting announcement in 2021.
Zeekr and WeRide’s openings are still a far cry from the halcyon days of blockbuster listings by companies like Alibaba, which raised $25 billion in its 2014 IPO on the New York Stock Exchange. Chinese companies have raised less than $1 billion through U.S. listings this year, compared to more than $13 billion in 2021, according to Dealogic data.
But the return is still notable after two years in which Chinese regulators cracked down on overseas listings. It comes as China deals with an economic slowdown and new regulations that have hampered IPO fundraising at home, leaving companies ready for the spotlight with few options but to look abroad for cash.
Both AV companies have taken investors on something of a wild ride since their listings. WeRide’s stock soared almost 20 percent in its debut before falling back down to Earth; as of November 6, the company is trading 6 percent below its opening price.
Zeekr, which is majority owned by Chinese auto giant Geely, has followed a similar trajectory: its shares dropped after an opening day bonanza, but in recent weeks — even as the Department of Commerce pushes forward with its restrictions — the company’s stock has again begun to climb as sales in China of its newly launched SUV exceed analyst expectations.
Edward Au, southern region managing partner at Deloitte China, says he expects the United States to continue to be a popular IPO destination for Chinese companies next year, especially for tech firms. “Investors primarily seek returns and are often attracted to a company’s growth potential, sector strength, geographic opportunity, and overall business outlook — regardless of whether the company has operations in the market where it is listed.”
Noah Berman is a staff writer for The Wire based in New York. He previously wrote about economics and technology at the Council on Foreign Relations. His work has appeared in the Boston Globe and PBS News. He graduated from Georgetown University.