Tesla’s robotaxi hype should help Hong Kong’s stuttering IPO market

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Interest in self-driving cars has gone up a gear thanks to Tesla’s recent much-hyped robotaxi event. Chinese autonomous driving firm Horizon Robotics has chosen a good time to raise funds in a Hong Kong listing. If it reaches its target of raising up to $696mn, it would be the city’s largest initial public offering this year.

The company, backed by Intel and Volkswagen, will sell 1.36bn shares. This would make the listing bigger than China Resources Beverage. Before Horizon’s announcement, this soft drinks company had been on track to hold the city’s biggest new share sale this year after it started bookbuilding on Tuesday.

In Hong Kong, having multiple large listings in close succession has frequently meant more scattered funds from retail investors and less demand for companies that are not well-known household names. For Horizon, that should be less of an issue as it has already received significant interest from corporate investors. Cornerstone investors for the Horizon stock offering include the online business software unit of Alibaba Group and Chinese internet search giant Baidu. 

There are good reasons for the interest. Horizon manufactures advanced driver assistance systems and autonomous driving solutions for passenger vehicles in China. Unlike some self-driving and software start-ups that have yet to build a viable product or business model, Horizon has already supplied customers including Volkswagen’s Audi, Continental, BYD, Li Auto and SAIC. Volkswagen has invested in developing technology to integrate autonomous driving-related functions on to a single chip along with Horizon since 2022. Proceeds raised in the listing will be used for research and development as well as sales and marketing. 

Autonomous driving technology, especially fully self-driving cars, have been the topic of much debate. True, the commercialisation and mass production of driverless cars are likely to be many years in the future. But that does not necessarily mean it will take that much time to get individual autonomous driving functions — still requiring driver supervision — into today’s cars as lucrative add-ons.

Autonomous driving technologies use software, radars, lidar sensors and cameras to enhance safety and convenience for drivers. For example, the level of technology today can alert drivers to obstacles, help avoid collisions and assist in parking and lane centring — all of which carmakers can monetise through premium features. 

Hong Kong’s deflated listings market could do with the kind of hype that self-driving cars are generating. But a successful Horizon IPO should at least provide another much-needed boost to shift it out of the slow lane.

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