(Yicai) Sept. 19 -- Fourth Paradigm Technology, a Chinese artificial intelligence software startup, aims to raise as much as HKD1.13 billion (USD145 million) from its long-awaited initial public offering in Hong Kong on Sept. 28.

The business-to-business AI services provider, also known as 4Paradigm, targets at least HKD1.02 billion from the offering, whose shares are priced in the range of HKD55.60 to HKD61.16 (USD7.10 to USD7.80), the Beijing-based firm said in a regulatory filing yesterday. Ninety percent will be sold internationally and 10 percent publicly.

Based on the pricing, 4Paradigm’s market capitalization could be as high as HKD28 billion (USD3.6 billion). The company’s last financing round in 2021 valued it at about USD3 billion.

Three previous listing applications made by 4Paradigm in August 2021 as well as February and November last year lapsed. It most recently filed in April this year.

The three cornerstone investors are New China Capital Management, Beijing Zhongguancun Science City’s tech growth investment partnership, and Montage Technology. Between them they have subscribed to more than 70 percent of the shares worth HKD700 million (USD89.6 million).

4Paradigm lost CNY300 million (USD41.1 million) in the first three months of this year, while revenue surged 34 percent from a year ago to CNY644 million. Revenues have more than doubled in each of the past three years, reaching about CNY3.1 billion (USD422.3 million) in 2022, with a total net loss of over CNY4 billion. 

The net loss was mainly the result of high research and development outlays. From 2020 to 2022, 4Paradigm’s R&D spending climbed, hitting CNY1.65 billion last year.

Sixty percent of the IPO proceeds will go to enhance 4Paradigm’s basic research and technological capabilities as well as develop solutions over the coming three years, the filing showed. A fifth will go on expanding its product portfolio, brand building, and entering new sectors and fields.

About 10 percent will be allocated to strategic investments and acquisitions in the next three years and a similar portion for general corporate purposes.

Editor: Emmi Laine