Chinese AI agent StepFun is unwinding its offshore incorporation structure to pave the way for a planned Hong Kong initial public offering, three sources said, as Beijing tightens scrutiny of a system widely used for overseas fundraising.
China’s securities regulator said last month it had instructed some so-called “red-chip” companies that are registered abroad, mainly in tax havens, but hold assets and businesses in China via equity ownership, to unwind the structure.
Experts have said the move could delay some listings as red-chip companies scramble to change their domicile back to China, and some might even have to abandon their IPO plans as changing the legal structure of the company could be cost-prohibitive.
Shanghai-based StepFun, which develops general-purpose foundation models, has decided an onshore corporate structure would be more appropriate as it is heavily backed by state capital, said two of the sources with knowledge of the move.
Its structure had involved the Cayman Islands, according to corporate records.
All of the sources declined to be named discussing StepFun’s change of corporate structure because the information was not public. StepFun did not respond to Reuters’ requests for comment.
StepFun’s investors include investment vehicles of the Shanghai municipal and district governments as well as Qiming Venture Partners and Chinese technology giant Tencent Holdings, according to public disclosures and media reports.
Founded in April 2023 by former Microsoft Vice President Jiang Daxin, StepFun is regarded as one of China’s leading AI startups that have successfully developed large-language foundation models.
