Chinese chip maker Black Sesame slumps 26% in IPO as market turmoil worries investors
Its shares sank 26 per cent to HK$20.80 at 11.45am local time, versus its offering price of HK$28, according to stock exchange data, valuing the entire company at HK$HK$11.7 billion (US$1.5 billion). The broader market overturned losses, with the Hang Seng Index adding 0.8 per cent and the Tech Index jumping 1.2 per cent.
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Why investors can expect more market volatility after recent global stock sell-off
Why investors can expect more market volatility after recent global stock sell-off
The debut was preceded by a market sell-off this week that wiped out more than US$6 trillion of wealth from global equities. Concerns about a US recession, overpriced artificial intelligence-driven tech stocks and the Bank of Japan’s rate increases combined to spook investors.
“This listing makes us the first autonomous driving AI chip stock on the Hong Kong stock exchange, and also the first in Asia and even Europe,” said Shan Jizhang, founder and CEO at the Black Sesame. “Standing at a new starting point, we will actively embrace the vast market opportunities” in the industry, he added.
It allows specialist technology firms with a valuation of at least HK$10 billion to float shares even before they have generated a single dollar in sales. For companies with at least HK$250 million in sales in the financial year before their IPO, the minimum valuation is HK$6 billion.
“We are pleased to welcome another Chapter 18C listing today,” said Bonnie Chan, CEO of Hong Kong Exchanges and Clearing, the bourse operator. “This is the latest example of our commitment to continuously enhancing our listing framework to capture the opportunities of evolving trends in business and investments.”
Black Sesame signed a memorandum of cooperation with the Hong Kong Science and Technology Park in November last year and is preparing to open a research and development centre in Hong Kong, Financial Secretary Paul Chan said at the listing ceremony.
It counts among its investors Nio Capital, the investment arm of electric vehicle maker Nio, and a venture capital fund under smartphone giant Xiaomi. Cornerstone investors in its IPO are a subsidiary of Guangzhou Automobile Group and an investment unit of auto-parts supplier Ningbo Joyson Electronic.
The company plans to use around 80 per cent of the IPO proceeds for research and development over the next five years, and the rest to procure materials, services and software.
The company’s revenue was 60.5 million yuan, 165.4 million yuan, and 312.4 million yuan, in 2021, 2022, and 2023, respectively. Net losses for the same periods were 2.4 billion yuan, 2.8 billion yuan, and 4.9 billion yuan. The losses are expected to continue this year due to substantial research and development expenses, the company said.
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