Horizon Robotics to Raise HK$3.9 billion in Hong Kong IPO
Horizon Robotics (“Horizon”) is the first and currently the largest advanced driver assistance systems (“ADAS”) and autonomous driving (“AD”) solutions provider in China, it seeks a Hong Kong initial public offering (“IPO”) later this year aiming to raise HK$3.9 billion (US$500 million).
The Beijing-based firm has a long list of esteemed financial backers, which include Sinovation Ventures, Sequoia Capital, BYD, Dongfeng Motor Company,Volkswagen, Contemporary Amperex Technology Co. Limited (CATL), BOE and others.
It’s current clients include BYD, Geely, NIO, SAIC, Audi, Hyundai, Volkswagen, Bosch, among others.
The ADAS and AD solutions are a complex combination of hardware and software, which Horizon implements a co-optimization approach where both hardware and software are optimized for efficiency at affordable costs. Another important technical feature is the use of open development tools that enables its clients and other partners to participate in ecosystem development and accelerate adoption of autonomous driving solutions.
Horizon has been operating in the red for the past three consecutive years, despite achieving increasing revenue, its losses for the years across 2021, 2022 and 2023 were 2 billion yuan, 8.7 billion yuan and 6.7 billion yuan respectively. It should be noted that gross profit from 2022 to 2023 grew from 627 million yuan to 1.1 billion yuan, a 75% expansion while loss dropped 23% from 8.7 billion yuan to 6.7 billion yuan, signaling improving financials and the underlying strength in business growth.
Expansion to overseas markets and establishing clients and partnerships particularly in Japan, South Korea and Europe are high on the agenda. At the same time, Horizon plans to introduce more advanced driving solutions, at higher prices, to meet the increasing demands of autonomous driving.
Horizon’s current high concentration of clients, where significant revenue is generated from a limited number of customers, is a risk factor. Also, the competitive market of autonomous driving technologies means the company must invest heavily in research and development and if such efforts are unsuccessful or ineffective, its competitive position, operations and finances would be negatively impacted.
Future use of funds raised from the IPO would be investment in research and development for five years, funds would also be allocated to sales and marketing, future strategic investments with joint ventures as well as for working capital.
Graphics source: Horizon Robotics
