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Chinese AI firm 4Paradigm files for Hong Kong IPO after three failed attempts, citing US sanctions risks

  • Beijing Fourth Paradigm Technology has filed a fourth IPO application in Hong Kong, which comes after being put on the US Entity List in March
  • The company joins other Chinese AI firms like Megvii and SenseTime that have had listing plans affected by sanctions from Washington

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Chinese AI firms have previously had plans to publicly list affected by US sanctions. Photo: Shutterstock
Coco Fengin Beijing
Chinese artificial intelligence (AI) company Beijing Fourth Paradigm Technology, known as 4Paradigm, has filed for a Hong Kong initial public offering for a fourth time, as it seeks to raise new funds after being added to the US export control list last month.
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“There is a risk some business partners, particularly those in the US or with significant exposure in the US, might refuse to engage in certain business” with the company, 4Paradigm warned in its latest prospectus filed with the Hong Kong bourse on Monday.

The company, founded in 2014, was one of 37 entities added to the US Commerce Department’s Entity List in March over national security concerns, restricting their ability to purchase or access certain goods and technology without a licence.

The logo of Chinese AI firm 4Paradigm, which is seeking an IPO for the fourth time a month after coming under US sanctions. Photo: Handout
The logo of Chinese AI firm 4Paradigm, which is seeking an IPO for the fourth time a month after coming under US sanctions. Photo: Handout

The new filing comes just days ahead of the expiration of 4Paradigm’s last IPO application, filed in September. Two previous filings in August 2021 and February 2022 lapsed for unknown reasons.

The company said the sanctions “should not have a material impact on the business or operations of the group”, and “none of its material investors, customers, or suppliers have withdrawn their investment, [or] ceased doing business with it” following its placement on the Entity List.

The US sanctions do not apply to “legally distinct entities, such as subsidiaries or affiliates”, the company said, but noted that it has “no assurance whether the Entity List designation will be expanded to additional entities”. 4Paradigm said that it assumes all companies sharing its name and registered address are covered by the sanctions, and it understands that unsanctioned businesses cannot act as a front for the parent company.

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Like many of its peers in China’s AI industry, 4Paradigm remains in the red. Losses in 2022 totalled 1.6 billion yuan (US$240 million), narrowing 8 per cent from a year earlier. Revenue for the year grew 53 per cent to 3 billion yuan, according to the prospectus.

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