A jigsaw puzzle is falling into place before the Luxembourg state presents its “Automobility Incubator” on Tuesday 3 December in Bissen, after years of dancing around. , Pony.AI signed a memorandum of understanding with the state in March... and, according to Bloomberg, Uber intends to take part in Pony.AI’s IPO by investing around $10m “to use Pony.AI’s technology outside the United States,” says a source at Bloomberg. From there to imagining a robotaxi on some of Luxembourg’s roads, there's only one opening of the application...
“As part of our ongoing global expansion, Pony.AI is grateful to have Emile Weber, Luxembourg’s most trusted and reliable transportation provider, as a strategic partner for this endeavour. While Pony.ai brings its world-class autonomous technology and engineering prowess to the table, having an esteemed local transportation provider such as Emile Weber as a partner is crucial to the success of the partnership,” said Pony.AI founder and CEO James Peng in the October release.
Going public is a key moment for a company that has to, as one investment professional put it, “get naked.” In the prospectus that the Chinese company filed with the US Securities and Exchange Commission, we learn that:
- The company had total revenues of $68.4m in 2022 and $71.9m in 2023. This comes from engineering solutions services, virtual driver operation services and product sales;
- losses of $148.25m in 2022 and $125.328m in 2023;
- that it plans to raise $240m through its IPO, assuming that the initial public offering price is in the middle of the expected range of $11 to $13 per ADS (American depositary share) and that the over-allotment option is exercised in full ($12 as a basis for calculation, as the price has not yet been set);
- in addition to the public offer, the company has entered into concurrent private placement agreements with strategic investors for a total amount of approximately $153.4m;
- that it has already put 250 robotaxis and 190 logistics trucks into service;
- that it already has around 200,000 customers on its pilot application.
Luxembourg its only hub in Europe
Approximately 40%, or $125.3m, will be used for the large-scale launch of its autonomous driving technology in its main addressable markets, including robot taxi and robot truck services. Pony.AI already has partnerships with car manufacturers, transport companies and logistics hubs, and the funds could be used to strengthen these partnerships or enter into new ones. “We formalised a memorandum of understanding with the Luxembourg government in March 2024 to propel the evolution of autonomous mobility within Luxembourg, as our regional hub. Our collaborative efforts with the Luxembourg government and local partners aim to drive technological innovation and customise solutions tailored to the European market,” says the prospectus. Beyond China and the US, it states that its “business footprint extends to Luxembourg, South Korea, Saudi Arabia and the United Arab Emirates.”
40% will be invested in further research and development of its autonomous driving technology. The remaining $62.6m is for general corporate purposes and for potential strategic investments and acquisitions to strengthen its technology capabilities and global ecosystem, although it has not identified any specific investment or acquisition opportunities at this time.
A pending IPO
But will Pony.AI go through with its idea? Not for sure. Founded in China, Pony.AI went through a series of consolidated variable interest entities (the former VIEs). Then it took a step backwards by registering its holding company in the Caymans so that it could open in the United States. In other words, a holding company and two companies, one in China and one in the United States. Just before signing its agreement in Luxembourg, Pony.AI terminated the contractual agreements with the former VIEs, acquiring their shares from their respective designated shareholders. These former VIEs became wholly-owned subsidiaries of the Chinese subsidiary Pony AI Inc.
Except that in order to be listed in the United States, the US Holding Foreign Companies Accountable Act (HFCAA) requires foreign companies listed in the United States to allow the Public Company Accounting Oversight Board (PCAOB) to inspect their auditors. If the PCAOB is unable to inspect an auditor for two consecutive years, the company will be identified as a commission-identified issuer. If a company is identified as a commission-identified issuer for three consecutive years, its securities will be prohibited from trading on US exchanges.
The PCAOB was able to conduct inspections in China in 2022 but there is no guarantee that it will be able to do so in the future. This is what needs to be ensured if investors are to decide to buy shares in the Chinese startup.
This article was originally published in .