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Unisound Launches Modest IPO In Crowded Hong Kong Market

The AI services provider is aiming to raise a relatively modest $40 million, or just over 2% of its share capital, as it rapidly burns through its cash

Key Takeaways:

Unisound aims to raise about $40 million through a Hong Kong IPO, with its shares set to start trading on June 30

The AI services provider recorded 29% revenue growth last year and has a relatively diverse customer base, but is rapidly burning through its cash

Is the market for new AI listings becoming oversaturated?

That question was front-and-center in the latest listing document from Unisound AI Technology Co. Ltd. (9678.HK), which launched its Hong Kong IPO on Friday with a very modest fundraising target of up to HK$320 million ($41 million). The company plans to sell 1.56 million shares in the listing, representing just 2.2% of its share capital, which seems to show it's not extremely confident of big demand for the stock.

What's more, Unisound said it has already found cornerstone investors to buy about one-third of the shares on offer, meaning it's aiming to sell around just 1 million shares to other investors for between HK$165 and HK$205 apiece. A pricing at the top of its range would give the company a market value of HK$14.5 billion, though it seems more likely it could price closer to the bottom, which would value it at $11.7 billion, according to the latest listing document.

The stock is set to make its trading debut on June 30.

So, why is Unisound so hesitant with this offering? The company provides AI products and services designed to help healthcare and more general clients from sectors like hospitality and transportation, run their operations more efficiently. It's growing at a respectable, though not eye-popping, rate, including 29% revenue growth last year.

But the company is cash-flow negative, and consumed over half of its cash last year. It's also making its listing into one of Hong ...