Cloudwalk Technology is a leading artificial intelligence facial recognition company in China. The firm has made a high-profile debut for as much as $553m on the Shanghai Star IPO. They must struggle to the Nasdaq-style market, facing pressure to price their deals after disappointing debuts. Lately, the regulators scrutinize IPO pricing, with 80% of the companies listed underwater since early this year.
Later, the Shanghai Stock Exchange conducted meetings with brokerages to talk about stabilizing new Star listings. They also plan to utilize IPO trading performance, a new metric evaluating the bookrunners. However, The Securities Association of China has suspended one of Western Securities’ institutional accounts. The suspension is for quoting or subscribing to new IPOs. The previous quote was at 30 times the eventual issue price during pricing consultation. It is for the planned Star IPO over image sensor chip design from SmartSen Technology, Shanghai.
Cloudwalk struggles to hold a full seven days of private roadshows before having the formal price consultation. The firm has announced the issue price on May 16. Bankers away from this deal argued that having seven small-scale road shows is not common before pricing consultation day. The normal road shows took at least three to five days. A longer road show would potentially give more time for Cloudwalk to talk with long-term investors.
A banker in Beijing assumed that the deal carries too much pressure. The secondary market is really dismal, said the banker. When the market is poor, having more than three-day road shows would be more common. The first banker also added that for unprofitable companies, the probability of trading below water is very high. Cloudwalk attempts to offer 112. A-shares, or 10% of its capital. There is also a 15% greenshoe.
