AI firm Xiaoi keen on Hong Kong flotation after mainland delisting

Artificial intelligence solutions provider Shanghai Xiaoi Robot Technology, which last month withdrew its listing from China’s National Equities Exchange and Quotations (NEEQ) board, is keen to float shares in Hong Kong, according to its chairman. 

Yuan Hui said he is confident the loss-making company can meet listing requirements. 

“We are interested in Hong Kong because the city has in the past two years announced various policies to support the growth of innovative technology companies,” he said in an interview on the sidelines of the Boao Forum for Asia.  

Under Hong Kong Exchanges and Clearing’s listing rules revised last year, Growth Enterprise Market-listed firms must have a minimum market capitalisation of HK$150 million (US$19.1 million) but there is no profit requirement. 

Those listed on the main board need a capitalisation of at least HK$500 million and need to post profits for three financial years. 

Xiaoi last month delisted from the four-year-old NEEQ because of low trading volumes, Yuan said, adding it will seek to re-list in a more liquid market either in the mainland, Hong Kong or the US. 

The company posted a net loss of 13.9 million yuan (US$2.2 million) on 65.1 million yuan of revenues for the first six months of last year, according to its latest available financial statements. 

Set up in 2001, the company has sold software and solutions to thousands of firms in sectors including finance, telecommunications, legal and medical, which helps them to save on labour and gain efficiencies. 

Its clients include HSBC and BOC International in Hong Kong and CTBC Bank in Taiwan. 

Its investors include state-backed financial conglomerate Everbright Group and e-commerce giant Alibaba Group Holding, which owns the South China Morning Post. 

Xiaoi also recently completed a round of shares issue that raised “several hundred million” yuan from investors including Zhejiang Silicon Paradise Asset Management, Yuan said. 

He would not disclose the market valuation of Xiaoi in the fundraising exercise, saying it has little indicative value for the firm’s potential future valuation when it goes public again. 

Yuan conceded that although the AI business holds promise, it has not been easy to generate large revenues on the mainland where the vast majority of customers pay modest licence fees for software relative to the benefit generated. 

“If one can generate 200 million yuan of revenues a year, it is already quite big in the AI industry,” he said. “The business model is relatively outdated in the mainland … in the US, fees are linked to labour cost savings reaped by the customers or are charged on each transaction conducted by them.” 

He said this week’s announcement by Beijing to further open the mainland’s financial and car industries to foreign participation will help increase acceptance and a gradual transition to a benefit-linked revenue model. 

The company is also involved in a five-year legal battle with Apple over allegations by Xiaoi that the US mobile phone and computer giant’s intelligent personal assistant Siri AI application embedded in its products has infringed on its intellectual property rights. 

Further action depends on a ruling by the Supreme People’s Court on whether Xiaoi owns valid intellectual property on the technology under infringement dispute, Yuan said.