(Yicai) Oct. 18 -- Horizon Robotics, a Chinese provider of advanced driver assistance systems and autonomous driving solutions, is expected to raise about HKD5.4 billion (USD695 million) in its upcoming initial public offering on the Hong Kong Stock Exchange.

Horizon will issue 1.36 billion shares at a price of HKD3.73 to HKD3.99 (48 US cents to 51 US cents) and be listed under the stock code [HKG: 9660] on Oct. 24, the Beijing-based company announced in a bourse filing on Oct. 16. Goldman Sachs, Morgan Stanley, and China Securities International will be the joint sponsors.

The IPO's cornerstone investors are Alibaba Group Holding's subsidiary Alisoft China Holding, Baidu's Hong Kong branch, a company under multinational corporation Merit France, and an investment fund backed by the Ningbo government. Together, they will invest USD219.8 million in Horizon.

Since its establishment in 2015, Horizon completed 11 financing rounds, raising a total of over USD8.7 billion from pre-IPO investors, such as Chinese carmakers SAIC Motor and BYD, private equity giant Hillhouse Investment, and venture capital firm Sequoia Capital.

Horizon's main competitor Black Sesame went public in Hong Kong in August. The stock [HKG: 2533] opened nearly 33 percent down at HKD18.80 (USD2.42) on its debut on Aug. 9. It has fallen about 18 percent since then.

Horizon was China's fourth-largest provider of ADAS and AD solutions in terms of installed capacity both last year and in the first half of this year, according to statistics from China Insights Consultancy. Its revenues and gross profit margins have increased in recent years, but net losses widened due to high research and development expenses.

Horizon's revenues totaled CNY910 million (USD127.8 million) in 2022 and CN1.5 billion (USD210.6 million) last year. In the six months ended June 30, revenue reached CNY935 million, up 152 percent from a year earlier. Gross profit margin was 69 percent, 71 percent, and 79 percent, respectively, in the three periods.

However, the company's net losses were CNY8.7 billion in 2022, CNY6.7 billion last year, and CNY5.1 billion in the first half of this year. R&D spending accounted for 208 percent, 153 percent, and 152 percent of the revenues in the three periods, respectively.

Last November, Horizon set up a joint venture with German carmaker Volkswagen Group's auto software subsidiary Cariad. Horizon owns 40 percent of the JV, and Cariad the remaining 60 percent.

Cariad was Horizon's largest customer last year and in the first six months of this year, contributing 40 percent and 38 percent, respectively, to the company's revenues in the periods.

Editor: Futura Costaglione