Chinese self-driving firm Pony AI seeks up to $4.5 billion valuation in US IPO

By Arasu Kannagi Basil

(Reuters) -Pony AI is seeking a valuation of up to $4.48 billion in its U.S. initial public offering, it said on Thursday, as the Chinese self-driving firm moves ahead with its long-sought plan for a New York listing.

Pony, founded in 2016 and backed by Japanese automaker Toyota, aims to raise up to $195 million by offering 15 million American Depositary Shares priced between $11 and $13 each.

Self-driving firms are looking to raise capital as they seek to scale operations. Guangzhou-based Pony, whose fleet includes over 250 robotaxis and 190 robotrucks, will enter the U.S. stock market on the heels of rival WeRide's Nasdaq debut in October.

Two investors, including Chinese carmaker BAIC, have indicated on buying shares worth $74.9 million in the IPO.

Certain investors have also agreed to buy about $153.4 million worth of shares through concurrent private placements.

Pony's proposed target is a climb-down from its $8.5 billion valuation in a 2022 funding round. In September, its board slashed the minimum IPO valuation to $4 billion from $8.5 billion and proceeds to $200 million from $425 million.

"The same bull or bear thesis investors have about WeRide also applies to Pony AI," said Matt Kennedy, senior strategist at Renaissance Capital, a provider of pre-IPO research and IPO-focused ETFs. "A currently small and unprofitable company that is growing fast in what is expected to be an enormous market."

Chinese companies are slowly pursuing New York flotation following a long hiatus after ride-hailing giant Didi Global was forced to delist its U.S. shares due to a clash with Beijing.

The IPO comes after a 2021 attempt to go public through a $12 billion blank-check deal fell through as Beijing cracked down against Chinese technology companies.

Beijing has since softened its stance and published rules last year to revive offshore listings.

Zeekr's $441 million May IPO is the biggest U.S. listing by a China-based company in 2024, LSEG data showed.

ROCKY ROAD

While some tout robotaxis as the future of mobility, analysts believe the industry faces a rocky road ahead.

Safety concerns and regulatory roadblocks have slowed the technology's commercialization. Profitability is another hurdle as robotaxis require significant investments in research and development.

Still, China has swiftly approved trials compared to the U.S. as authorities support economic goals.

Meanwhile, the White House is expected to ban vehicles with China-developed systems on American roads due to national security concerns.

Pony, which last year secured $100 million from Saudi Arabia's NEOM, is also backed by Canadian pension fund Ontario Teachers' and venture capital firm HongShan, formerly Sequoia China.

Pony will list on the Nasdaq under the symbol "PONY".

Goldman Sachs, BofA Securities, Deutsche Bank, Huatai Securities and Tiger Brokers are underwriting the IPO.

(Reporting by Arasu Kannagi Basil in Bengaluru; Editing by Alan Barona and Shailesh Kuber)