China's self-driving startup WeRide's shares surge in Nasdaq debut
WeRide opens for trading at the IPO price of $15.50
China-based companies seek U.S. IPOs as activity picks up
WeRide raises $120 million in IPO, $320.5 million in private placement
Success may influence future U.S. listings for Chinese firms - analysts
Updates headline and paragraph 1 to debut performance; Adds analyst comment in paragraph 5,6, 11, 12 and 19, graphic on performance of IPO index
By Manya Saini, Niket Nishant and Jahnavi Nidumolu
Oct 25 (Reuters) -WeRide's WRD.O shares rose 19% in their Nasdaq debut on Friday, after the self-driving startup raised $440.5 million in its IPO and private placement, becoming the latest Chinese firm to capitalize on improving market sentiment.
The strong performance reflects a growing appetite among U.S. investors for Chinese companies, following nearly two years of uncertainty after the ride-hailing giant Didi Global's delisting due to regulatory backlash in China.
Beijing has since softened its stance with the U.S. accounting watchdog and China resolving a long-standing audit dispute in December 2022.
"Companies in hot sectors are going to get attention wherever they're from," said David Manno, partner at securities law firm Sichenzia Ross Ference Carmel.
"There's so much enhanced disclosure that I don't think it's going to be an issue for Chinese companies going public (in the U.S.)."
Meanwhile, the U.S. IPO market has also picked up in recent weeks with investors showing renewed interest in promising tech startups, after nearly two years of dry spell.
"The bottleneck in 2022-2023 has built up the pipeline," said Matt Kennedy, senior strategist at IPO research firm Renaissance Capital.
"I don't see this deal as having a big impact on the broader tech sector, but it is definitely a meaningful data point for the other autonomous vehicle startups, as well as China-based companies."
WeRide sold 7.74 million American depositary shares at $15.50 apiece - the lower end of its targeted range - to raise roughly $120 million. The IPO valued the company at over $4 billion.
It also raised around $320.5 million in a concurrent private placement.
The Chinese firm, known for autonomous taxis, vans, buses and street sweepers, is testing and conducting commercial pilots in 30 cities across seven countries.
The stock was last trading at $18.44 after opening flat at $15.50.
ROBOTAXI CHALLENGES
Analysts and industry experts suggest that establishing robotaxi services may still take years, largely due to the need for robust safety and reliability. Still, China has been more proactive in approving trials compared to the United States.
Accidents involving autonomous vehicles, as well as the technology's current limitations in responding to challenging scenarios - like inclement weather, complex intersections, and unpredictable pedestrian behavior - are significant hurdles.
Meanwhile, the Biden administration is proposing a rule prohibiting Chinese software and hardware in connected and autonomous vehicles on American roads due to national security concerns.
Companies hope that as the sector matures it will transform urban transportation and mobility. EV maker Tesla TSLA.O also showcased a long-awaited robotaxi and robovan in October.
Another autonomous driving firm Pony AI, backed by automaker Toyota 7203.T and with operations in China, also filed for a Nasdaq listing in earlier this month.
"If WeRide performs well, that will be a very encouraging sign for competitor Pony AI," Kennedy said.
One year performance of major IPOs vs broader markets https://reut.rs/4hmQHG8
Reporting by Manya Saini, Niket Nishant and Jahnavi Nidumolu in Bengaluru; Editing by Shilpi Majumdar, Sonia Cheema and Vijay Kishore
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