China’s tech crackdown thwarts Pony.ai’s US listing plans, insiders say
- The autonomous driving start-up’s hold on going public follows Beijing’s move to ban ride-sharing giant Didi from signing up new users soon after its IPO
- The company will now seek to raise money in a private fundraising round at a valuation of US$12 billion
Autonomous driving start-up Pony.ai has put on hold plans to go public in New York through a merger with a blank-cheque firm at a US$12 billion valuation, after it failed to gain assurances from Beijing that it would not become a target of a crackdown against Chinese technology companies, people familiar with the matter said.
The decision makes Pony.ai one of the biggest companies to suspend its US listing plans after China banned ride-sharing giant Didi Global Inc from signing up new users just days after its blockbuster initial public offering (IPO) in June.
It followed up with crackdowns on other Chinese technology firms over concerns about the safety of user data, which led to some companies, such as LinkDoc Technology and Hello Inc, scrapping their US listing plans.
The Toyota Motor Corp-backed start-up will now seek to raise money in a private fundraising round at a valuation of US$12 billion, said the sources, who requested anonymity because the matter is confidential. It still hopes for a US listing in the unlikely event it receives a green light from the Chinese government imminently, the sources added.
Operating in both the United States and China, Pony.ai maintains a significant presence in Chinese cities including Beijing and Guangzhou, where it launched commuter pilots and signed partnerships with Chinese state-owned auto groups.
It was concerned that the Chinese regulators could take action if it proceeded with a US stock market debut, the sources said. Details of Pony.ai’s discussions with the Chinese authorities could not be learned.
Pony.ai had been in exclusive talks to go public through a merger with special purpose acquisition company (SPAC) VectoIQ Acquisition II. The deal would have been financed with a private placement from investors of roughly US$1.2 billion, and the company had aimed to list by October, according to the sources.
A spokesperson for Pony.ai said the company has no current plan or timeline to go public and declined to comment on the talks. The Cyberspace Administration of China, which has been leading the crackdown on technology companies such as Didi, did not immediately respond to a request for comment. VectoIQ declined to comment.
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Had Pony.ai gone ahead with the listing, it would also have faced US scrutiny. The US Securities and Exchange Commission said last month it would not allow Chinese companies to raise money in the United States unless they fully explain their legal structures and disclose the risk of Beijing interfering in their businesses.
The Committee on Foreign Investments in the United States, which reviews deals of companies with foreign ties for potential national security risks, has also been scrutinising SPAC deals.
Pony.ai CEO James Peng told Reuters in June that the company was considering going public in the United States to help fund its goal of commercialising driverless ride-hailing services. He provided no details of how this would happen.
In May, Plus, an autonomous truck company with operations and partnerships in China, clinched a deal to go public through a US$3.3 billion merger with Hennessy Capital Investment Corp V, before China’s technology crackdown. That deal is still expected to close by the third quarter.
Pony.ai, which develops and tests its autonomous driving vehicles in the United States and China, said in November that its valuation reached US$5.3 billion after raising more than US$1 billion in funding.
In June, the company hired Lawrence Steyn, vice-chairman of investment banking at JPMorgan Chase & Co, as its chief financial officer to prepare for a public listing.
VectoIQ II is the second SPAC to be led by former General Motors Vice-Chairman Steve Girsky, whose first SPAC struck a deal with electric truck maker Nikola Corp. It raised US$300 million in an initial public offering in January.
