An IPO planned for this week could have an impact on the self-driving vehicle market.
Reuters reports the trucking company TuSimple, which develops autonomous vehicle technologies, is looking for an $8 billion valuation in an IPO in which it hopes to raise $1.3 billion with shares priced from $35-$39.
The SEC’s S-1 registration form on TuSimple shows some of its successes – with over 800 employees and 240 core technology patents, this company seems ready to go when it comes to scaling and broadening its production. According to the SEC report, 5700 trucks have already been reserved within the first few months of operational availability, and TuSimple trucks have already traveled over 2.8 million miles.
There is, however, one caveat – it seems that like so many other companies in various industries, TuSimple is going to have to deal with the schizophrenic nature of Chinese-American trade.
TechCrunch reports a connection to the Chinese company Sun Dream may be problematic for TuSimple, with two of Sun Dream’s members on the company’s board.
“Sun Dream is TuSimple’s largest shareholder, with 20% Class A shares,” writes Rita Liao at TechCrunch, citing the company’s IPO filing data. “Charles Chao and Bonnie Yi Zhang, respectively the CEO and CFO of Weibo, are both members of TuSimple’s board. If the U.S. government concludes that Sun Dream’s investment poses a threat to the national security of the country, the investor may be told to divest from TuSimple.”
In general, Liao notes that while the two governments seem intent on trying to separate their industrial private sectors, companies keep trying to jam the two back together, like some unintended conjoined twin.
“While the governments of the United States and China are pushing policies for technological decoupling, private tech firms continue to tap resources from both sides,” Liao writes. “In the field of autonomous vehicles, it’s common to see Chinese startups — or startups with a strong Chinese link — keep operations and seek investments in both countries. But as these companies mature and expand globally, their ties to China also come under increasing scrutiny.”
On the other hand, Morgan Stanley, J. P. Morgan, and Citibank are underwriting. Here’s more from the S-1:
“We have granted Morgan Stanley & Co. LLC (“Morgan Stanley”) a right of first refusal, subject to certain limitations, to provide services if we decide to pursue certain transactions, including a sale of greater than 50% of our shares, on or prior to May 14, 2021. The terms of any such engagement of the representative will be determined by separate agreement. In accordance with applicable rules of the Financial Industry Regulatory Authority, Inc. (“FINRA”), Morgan Stanley does not have more than one opportunity to waive or terminate the right of participation in consideration of any payment or fee. The underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging, financing and brokerage activities. Certain of the underwriters and their respective affiliates have, from time to time, performed, and may in the future perform, various financial advisory and investment banking services for us, for which they received or will receive customary fees and expenses.”
Will TuSimple succeed? Ultimately, one or more companies will break through into the vastly scaling EV market. Keep this one on your radar.