Can a small Nanjing tech firm help revive IPO pipeline for Chinese companies to raise funds in the US?

Smart parking systems provider Yi Po International Holdings plans to raise US$27 million from its initial public offering on the Nasdaq stock market in New York

A successful offering would make Yi Po the first Chinese tech firm in more than six months to list in the US after ride-hailing giant Didi Chuxing last June

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Founded in 2017, Yi Po International Holdings operates intelligent parking systems installed in 18 cities in the world’s largest car market. Photo: Shutterstock

Published: 9:00pm, 8 Feb 2022Updated: 9:16pm, 8 Feb 2022

Smart parking systems provider Yi Po International Holdings may serve as the canary in the coal mine to determine whether Chinese companies can confidently resume efforts to go public in the United States, according to analysts, following ride-hailing giant Didi Chuxing’s initial public offering (IPO) debacle in New York last year.

Four-year-old Yi Po, based in Nanjing, capital of the eastern coastal province of Jiangsu, last month updated its filing for an IPO on the Nasdaq stock market in New York, where it plans to raise US$27 million and become the first Chinese technology company in more than six months to list in the US.

The company, which was set up under a variable interest entity (VIE) structure, would also be the first Chinese tech firm to go public overseas since Beijing regulators gave tacit approval for VIEs to list in offshore markets. VIEs typically allow overseas investors to share profits generated from businesses in China based on special arrangements, bypassing laws that otherwise ban investment by foreigners.

It is possible for Yi Po, which was incorporated in the Cayman Islands, to get the green light for its US listing from the relevant authorities as long it satisfies existing regulatory requirements, according to John Dong, a securities lawyer at Joint-Win Partners in Shanghai.

Even if Yi Po’s IPO on the Nasdaq goes ahead, Dong indicated that it does not mean there will be a full resumption of China tech IPOs in the US.

“There are still many uncertainties,” he said. These include “the attitude of regulators, companies’ control on the cost of compliance and the capital market’s valuation of companies, [which means] things may not be in a very clear direction for quite a long time”.