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Bitmain secretly submitted a prospectus to the U.S. Securities and Exchange Commission (SEC) in late October, and plans to complete its listing in early 2020, raising up to US$500 million.
Bitmain’s road to listing was quite bumpy .
On September 26, 2018, Bitmain first submitted an application for listing on the main board of the Hong Kong Stock Exchange, but in the following six months, there was no update on the listing documents. According to the regulations of the Hong Kong Stock Exchange, if a company makes no progress within six months after submitting a listing application, the application will be invalid.
On March 26 this year, six months after Bitmain submitted its IPO application, co-founders Zhan Ketuan and Wu Jihan, who were still in their “honeymoon period” at the time, and CEO Wang Haichao sent an email to all employees saying, “This round of IPO application will expire in the near future, and we will restart the listing process at an appropriate time in the future.”
As to why the Hong Kong Stock Exchange did not approve the listing applications of several mining machine manufacturers including Bitmain, Hong Kong Stock Exchange CEO Li Xiaojia told the media at this year's World Economic Forum in Davos, Switzerland, "You made billions of dollars through business A in the past, but suddenly said you wanted to do business B in the future, but you don't have any results yet. Then I feel that the business model A that you used to go public is no longer sustainable. Can you still do this business and make this money?" Here, business A refers to the sales of mining machines, and business B is AI chips.
In June this year, Bloomberg quoted people familiar with the matter as saying that Bitmain will resume its IPO plan and submit listing documents to the U.S. Securities and Exchange Commission (SEC) as early as July. According to the information currently displayed by Canaan on the SEC, the date of its first submission of the draft version of the listing application was July 23. In other words, Bitmain still had a good chance of becoming the "first stock" of mining machine companies at that time.
In addition, Bitmain also signed a new round of large-scale employee option contracts at the end of June, and almost all employees hold shares, which can also be regarded as preliminary preparations for listing in the United States.
Until the end of October, there was a "shock" in Bitmain's management, and the conflict between the two co-founders was made public.
Tianyancha information shows that Bitmain's operating entity, Beijing Bitmain Technology Co., Ltd., underwent industrial and commercial changes on October 28. Bitmain Chairman Zhan Ketuan resigned as the legal representative and executive director, and was replaced by Bitmain co-founder Wu Jihan. At the same time, Ge Yuesheng, who had followed Wu Jihan to establish the new project "Matrixport", replaced Wu Jihan as the company's supervisor.
On October 29, the first day after the industrial and commercial information was changed, Bitmain co-founder Wu Jihan sent an email to all employees, saying that he had decided to remove Zhan Ketuan from all his positions in Bitmain, effective immediately. The email stated that no Bitmain employee could follow Zhan Ketuan's instructions or attend meetings convened by Zhan Ketuan. If they violated the rules, the company would consider terminating the labor contract depending on the severity of the violation; if the company's economic interests were damaged, the company would pursue civil or criminal liability in accordance with the law.
The email was signed by Jihan Wu, "Bitmain founder, chairman of the board of directors of Bitmain Group, legal representative and executive director of Beijing Bitmain Technology Co., Ltd." On November 5, Jihan Wu replaced Zhan Ketuan as manager.
On November 2, Bitmain once again sent an email to all employees stating that "the 2019 annual salary increase will begin on November 4, and this salary increase will cover no less than 80% of employees." This is also the first company management measure taken by Wu Jihan after he regained control of the company, with the aim of gaining more support from internal employees.
On November 7, Zhan Ketuan issued a statement in response to his expulsion from Bitmain. He said, "As the founder and largest shareholder of Bitmain, I never knew that the legal representative registered with the government department would be suddenly changed without my knowledge while I was on a business trip." He also said that "I will return to the company as soon as possible through legal means to end this extraordinary period and restore the company's normal order."
It is worth noting that the aforementioned prospectus submitted by Bitmain to the Hong Kong Stock Exchange shows that the two co-founders, Micree Zhan and Jihan Wu, are the main shareholders, holding 36% and 20% of the shares respectively. It is unknown how the shareholding ratios of the two will change before and after this "shock".
The prospectus also shows that the shareholding ratios of major investment institutions are not large: Sequoia Capital holds about 3.14%, Innovation Works holds about 1.13%, Temasek holds 0.35%, IDG Capital and Beijing Integrated Circuit Industry International Fund hold 0.02% and 0.07% of the shares respectively.
Indeed, for companies that choose to go public in the United States, changes in the domestic legal representative and directors will not directly affect the listing process.
However, it is undeniable that the internal struggle between the two co-founders will more or less affect the confidence and judgment of investors. In addition, the two parties may fight for their respective rights through legal proceedings, which will directly slow down the entire listing process.
This article is from “IPO Early Knowledge”.
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