WiMi Hologram Cloud Inc, a Chinese provider of ad services and software used in holographic augmented reality, has trimmed its proposed initial public offering (IPO) in the US to $33 million at the mid-range, according to its latest filing with the SEC.
The Beijing-based company previously filed to offer 4 million American depositary shares (ADSs) at a price range of $7.50 to $9.50, which would raise $34 million at the midpoint. WiMi, however, lowered the price range to $5.50 to $7.50 but raised the ADSs offering to 5 million.
Most notably, WiMi becomes the only company planning to price its IPO this week, as the US market grinds to a virtual halt due to volatility from the coronavirus outbreak.
Founded in 2015, WiMi offers holographic AR advertising services and entertainment products. Its software allows users to insert real or animated three-dimensional objects into video footages to create an immersive and interactive holographic AR experience.
The company claims to be the leader in China’s $500-million and growing holographic augmented reality space. For the 12 months ended June 30, 2019, WiMi Hologram booked $39 million in revenue, with 83.1 per cent of the total generated by its holographic AR advertising services.
In the first half of 2019, holographic AR ads produced using the company’s software generated a total of approximately 4.9 billion views, as compared to approximately 2.7 billion views during the same period in 2018, representing an increase of 81.5 per cent.
WiMi aims to use bulk of the IPO proceeds for research and development purposes, including the development of holographic facial recognition systems, AI facial change, digital life system, holographic education intellectual properties, navigation system for cars and more. It also seeks to finance strategic acquisitions and investments using the IPO proceeds.
The company, however, acknowledges that the ongoing Covid-19 pandemic poses a substantial risk to its operations and financial condition. Its offices though have reopened and fully operational since March 16, 2020.
“The global stock markets have experienced, and may continue to experience, significant decline from the COVID-19 outbreak. It is possible that the price of our ADSs will decline significantly after the consummation of this offering, in which case you may lose your investment,” WiMi said in its amended SEC filing.
A number of companies have put their planned IPO on hold as the spread of Covid-19 shatters equity markets and dampens investor appetite for new investments.
In the US, Carlyle Group has delayed the IPO of German specialty chemical manufacturer Atotech while Russia’s largest petrochemical company Sibur ruled out taking the company public this year.
58 Home, the maid and home-maintenance service owned by China’s Craigslist equivalent 58.com Inc., also delayed its planned US IPO.
In Southeast Asia, as many as 31 IPOs were recorded in the first quarter of the year with companies raising $3 billion, up 63 per cent on-year by deal volume and 885 per cent by value, according to data from Ernst & Young (EY). The burst of IPO in January-March, however, could be the last hurrah as the virus outbreak continues to weigh on deal activity.