In a significant move demonstrating confidence in the burgeoning Chinese autonomous driving market, tech giants Alibaba Group Holding (BABA) and Baidu Inc (BIDU) are joining forces to invest in Horizon Robotics’ upcoming IPO. The company, a leader in advanced driver-assistance systems (ADAS), is set to raise nearly $700 million through its listing on the Hong Kong Stock Exchange, as reported by the Wall Street Journal.
Horizon Robotics is aiming to begin taking orders from institutional investors this Wednesday, with the official trading commencing on October 24th. To further boost appeal among both institutional and retail investors, Alibaba, Baidu, and the state-owned Beijing Financial Holdings have committed to purchasing over 30% of the company’s shares before the IPO. This cornerstone backing is expected to solidify the IPO’s success.
The funds raised from the offering will primarily be directed towards research and development, with approximately 70% earmarked for this purpose over the next five years. The remaining funds will be allocated to marketing and operational expenses. Top banking institutions, including Goldman Sachs, Morgan Stanley, and China Securities International, are advising on the deal.
This strategic investment aligns with Alibaba’s recent endeavors in the autonomous driving sector. The company’s cloud unit, in collaboration with Nvidia Corp (NVDA), has been actively developing autonomous driving technologies for Chinese electric vehicle (EV) manufacturers like Li Auto Inc (LI) and Xiaomi Corp (XIACF, XIACY). At the Apsara Conference, Alibaba Cloud unveiled a large multimodal model (LMM) solution for automotive applications, integrating its Qwen portfolio of proprietary large language models (LLMs) with Nvidia’s Drive AGX Orin platform. This integration aims to enhance in-car voice assistants.
The recent investments by Alibaba and Baidu in Horizon Robotics highlight the growing significance of autonomous driving technology in China. The Chinese market is witnessing a rapid expansion in the adoption of EVs, and autonomous driving systems are poised to play a crucial role in this evolution.
Investors seeking exposure to Alibaba, often referred to as China’s tech barometer, can explore options like the Avantis Emerging Markets Equity ETF (AVEM) and the Global X Artificial Intelligence & Technology ETF (AIQ).
The investment in Horizon Robotics signifies a strategic move by Alibaba and Baidu to solidify their positions in the burgeoning autonomous driving market. The company’s focus on research and development, coupled with the support of prominent investors, sets the stage for its future growth and success in the Chinese automotive landscape.