China’s second largest Bitcoin mining machine manufacturer Canaan Inc is planning an IPO in Hong Kong. If successfully listed, it would become the first blockchain company listed on the Hong Kong Stock Exchange, according to people with knowledge of the matter.
The IPO plan came after a failed back-door listing attempt and a failed listing application to China’s New Third Board.
In June 2016, Shenzhen-listed Chinese electrical equipment maker Shandong Luyitong Intelligent Electric Plc. issued an announcement to acquire 100% of Canaan for RMB3.06 billion. It was the largest announced acquisition in the blockchain space at that time in China.
But three months later, Shandong Luyitong announced the termination of its plans to purchase Canaan, without clearly stating the reason for the withdrawal. Zhang Nanjian, CEO of Canaan, said after the deal was terminated that the exercise has had positive impact on the company, making it more standardized and transparent.
In August 2017, Canaan applied for a listing on China’s New Third Board and disclosed the company’s financial information. Nearly 100% of the company’s revenue came from the sale of Bitcoin mining machines. In recent years, 95% of its sales revenue came from the domestic market. In 2017, the company’s revenue exceeded RMB1.2 billion and its profits exceeded RMB300 million.
But the New Third Board listing plan didn’t go as planned neither. The company took the initiative to abandon the listing after multiple times of receiving feedback from regulators that weren’t very supportive.
The turn of events came last month, when Jiang Yang, vice chairman of the China Securities Regulatory Commission, visited Canaan’s office and showed support of the company’s listing in China. The official had a positive view on the company because the Canaan is a chip company, an industry that Beijing is hoping to strengthen rapidly.
According to public statistics, Canaan Inc. registered net profit of RMB300 million in 2017, 125 times more than its net profit of RMB2.24 million in 2015.
The predecessor of Canaan Inc. was a team led by Dr. Zhang Nanhao at Peking University. In 2011, the team was credited as having produced China’s first bitcoin mining machine, Avalon, which claimed to be the most powerful mining machine in the world at that time.
In 2015, Canna began the research and development of artificial intelligence chips. After two years, the company pre-released the world’s first artificial intelligence computing chip KPU in December 2017 for Bitcoin mining.
In May 2017, Canaan raised RMB300 million(US$47.1 million) in a series A round from Shanghai Baopu Investment Management Ltd., Jinjiang International Company Limited and Tunlan Investment, giving it a valuation of RMB 3.3 billion(US$518.4 million).