IPO pricing | Fourth Paradigm received 11.4 times more subscription, priced at HK$55.6 per share

According to Futu News on September 27th,$PHANCY (06682.HK)$An announcement was issued. The company will issue 18.396 million shares, priced at HK$55.60 per share, and 100 shares per lot. It will be listed on September 28.

The fourth model of the public offering phase received about 11.4 times more subscriptions, and the final number of offered shares distributed to the public offering was 1,839,600 shares, accounting for about 10% of the total number of shares offered (before any over-allotment rights were exercised). A total of about 12,700 valid applications were received, with a first-hand winning rate of 50%, and a steady 1-lot subscription of 20 lots.

Furthermore, the international offering was oversubscribed. The final number of shares offered was approximately 16.5564 million shares, equivalent to about 90% of the total number of shares offered (before any overallotment rights were exercised). Futu Information collates relevant data in the following table:

Company Overview

Fourth Paradigm is an artificial intelligence software company that is a leader in enterprise artificial intelligence. It focuses on providing platform-centered artificial intelligence software to enable enterprises to develop their own decision-making artificial intelligence applications. The company's enterprise-grade solutions aim to provide services to enterprises rather than individuals, provide platform-centered artificial intelligence solutions, enable enterprises to achieve rapid large-scale transformation and implementation of artificial intelligence, discover hidden data patterns, and comprehensively improve the decision-making capabilities of enterprises.

In August 2020, the fourth paradigm officially launched Sage AIOS, an upgraded and integrated artificial intelligence operating system. Sage AIOS is an artificial intelligence operating system with a user-friendly interface, standardized data processing, automated resource management and configuration, and full compatibility with intermediate software, comparable to personal computer operating systems.

In June 2021, the company launched an enterprise-grade artificial intelligence app store, an artificial intelligence app marketplace that provides users with choices. The fourth paradigm integrates algorithms and standards used by the company and its partners in its ecosystem, and a series of artificial intelligence applications developed on Sage AIOS to easily meet users' needs for intelligent operation in different application scenarios.

Fourth-paradigm solutions have created value for businesses in various industries, including but not limited to: finance, retail, manufacturing, energy and electricity, telecommunications, transportation, technology, education, media, and healthcare.

Financial Overview

In terms of financial conditions, during the record period, the fourth paradigm achieved very rapid growth. Revenue increased 114.2% from RMB 942 million in 2020 to RMB 2,018 million in 2021, and further increased by 52.7% to RMB 3,083 billion in 2022.

The company's revenue increased by 33.6% from RMB 482 million for the three months ended March 31, 2022 to RMB 644 million for the three months ended March 31, 2023, mainly due to the expansion of its user base and increased user spending, driving revenue from application development and other services.

In line with its revenue growth, the fourth paradigm trade receivables (including trade receivables older than six months) also increased. As of 2020, 2021, December 31, 2022 and March 31, 2023, its trade receivables were RMB263 million, RMB778 million, RMB1,493 million and RMB1,494 million respectively.

Source: Disclosure Yi

Use of funding

In terms of fund-raising purposes, the estimated net proceeds from the company's global offering are approximately HK$836 million (assuming no over-allotment rights are exercised, the price per share is HK$55.6).

According to the prospectus, the fourth paradigm proposes to use the net proceeds from the sale of shares for the following purposes: about 60% will be distributed over the next three years to strengthen the company's basic research, technical capabilities and solution development; about 20% will be distributed over the next three years to expand the company's products, build brands, and enter new industry sectors; about 10% will be distributed over the next three years to seek strategic investment and acquisition opportunities to implement a long-term growth strategy to develop solutions and expand and penetrate the vertical industries covered by the company; about 10% will be used for general corporate purposes.

Editor/Danial

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