China's TuSimple trades flat after $1.3b US IPO

The company sold approximately 33.8 million class A shares for $40 apiece, above the indicative range of $35-39, according to a statement. The IPO comprised 27 million in new shares and 6.7 million shares held by Sina Corporation, which took $268 million off the table through a partial exit.

Earlier this year, the Committee on Foreign Investment in the US (CFIUS) asked TuSimple to make a filing regarding Sina's 2017 investment because autonomous driving is considered a critical technology. Possible consequences include restrictions on governance rights or compulsory divestment. The partial exit reduces Sina’s interest in TuSimple’s class A shares from 19.6% to 13.1%.

One-third of the offering was covered by three cornerstone investors. There was a concurrent private placement that saw US-based Perry Creek Capital commit $35 million. The stock opened at $40.25 on April 15 and quickly reached $41.50 before falling to $32.13. It closed at $39.22, down 1.95%.

Xiaodi Hou and Mo Chen, TuSimple’s founders, hold a majority voting interest by virtue of their class B shares. Other class A share investors include Hong Kong hedge fund Composite Capital and US-based truck manufacturer Navistar with 6.1% and 5.4%, respectively.

Sina’s 2017 investment was made alongside Nvidia’s VC unit and Zhiping Capital, according to AVCJ Research. Sina and Zhiping re-upped in a $55 million Series C round led by Composite later that year.

The company received $215 million across two tranches of Series D funding in 2019. Sina led the first of $95 million and CDH led the second of $120 million, which also featured UPS and Mando Corporation. TuSimple’s valuation surpassed $1 billion on completion of the first tranche.

Overall private funding exceeded $800 million. This includes Navistar’s equity investment, which was part of a deal to supply purpose-built semi-trucks capable of level four (L4) autonomy – where the vehicle is fully self-driving in certain environments, but it still needs a driver in the seat – to the North American market by 2024. Over 5,700 reservations have been made by about 10 customers.

Volkswagen-owned Traton is TuSimple’s partner in Europe and China. Work has already begun on an L4 truck freight route in Sweden, the prospectus states.

TuSimple claims to be the only self-driving truck player capable of driving on highways and surface streets without human intervention. It obtained an autonomous vehicle permit from the state of California in 2017 and completed L4 tests between California and Arizona. It wants to demonstrate completely driverless operations in 2021 and cover all major US interstate highways by 2024.

The company currently has 50 L4 autonomous semi-trucks – which come with perception and motion planning software, HD digital route mapping capabilities, and cloud-based oversight systems – running routes in Arizona, New Mexico, and Texas. The company has a further 20 L4 autonomous semi-trucks in China, where it was among the first to run pilot tests in Shanghai.

TuSimple generated $1.84 million in revenue last year, up from $710,000 in 2019. Over the same period, its net loss widened from $84.9 million to $177.9 million.

This represents the first attempt at a listing by a company in China’s red-hot autonomous driving space. The likes of Pony.ai, WeRide, Didi Autonomous Driving, and Momenta have added to their substantial fundraising totals this year. These companies focus on the mainstream robotaxi segment, although some have diversified into areas such as trucking in pursuit of more immediate returns.

Earlier this month, Plus – which is also a truck specialist – received $220 million in funding led by FountainVest Partners and ClearVue Partners. Inceptio is also active in the truck space.

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• Topics
• Greater China
• IPO
• Technology
• North America
• China
• automobiles
• Transportation
• CDH Investments Management
• Composition Capital Partners