- The AI startup plans to dismantle its red-chip structure to meet regulatory requirements.
- The move aligns with Chinese government's increasingly stringent scrutiny of Chinese companies seeking overseas listings.
Moonshot, the maker of the Kimi chatbot, is overhauling its corporate structure to pave the way for an IPO (initial public offering) in Hong Kong.
The Chinese artificial intelligence startup has formally notified its investors of the plan, aiming to comply with Chinese government's tightening regulatory requirements for Chinese firms seeking overseas debuts.
In an email sent to shareholders this week, Moonshot said it would begin dismantling its red-chip structure, Bloomberg reported on Tuesday, citing people familiar with the matter.
This setup follows a decades-old practice in which entities registered outside China hold assets and businesses within the country.
The Beijing-based startup had previously attempted to seek a regulatory exemption to retain its variable interest entity (VIE) structure.
However, the recent proposal to unwind the structure signals that the company's chances of securing a waiver are now slim, the report noted.
China's securities regulator has stepped up scrutiny of offshore entities, frequently requiring startups to justify the necessity of the VIE model.
Chinese government is looking to strengthen oversight and streamline compliance following a flurry of IPOs in Hong Kong over the past year.
Moonshot is raising about $2 billion in its ongoing funding round, bringing its valuation to more than $20 billion. This signals a growing market appetite for Chinese startups capable of rivaling Silicon Valley leaders.
The current structural overhaul won't affect the company's access to US dollar-denominated funds for now. Its backers include 5Y, IDG, HSG, Capital Today, ZhenFund, Alibaba and Tencent, Bloomberg cited the people as saying.
These US dollar funds can maintain their investments in Moonshot, as the company is planning to establish a joint venture structure that allows foreign backers to participate, retaining international capital while meeting compliance requirements.
