DeepSeek Plans Shanghai IPO to Fund AI Expansion
Chinese artificial intelligence startup DeepSeek has engaged CITIC Securities to prepare for an initial public offering on Shanghai’s tech-focused STAR Market, according to sources. The Hangzhou-based company intends to initiate the IPO process this year, according to sources. DeepSeek’s engagement of CITIC, which has not been reported so far, suggests that the startup is progressing in its IPO strategy. Companies aiming for a listing in mainland China generally engage securities firms to provide pre-listing guidance prior to the submission of their application. The timing of a potential offering, the amount DeepSeek could seek to raise, and its target valuation remain undetermined, according to sources. DeepSeek and CITIC have yet to provide a response to the enquiries made.
The discussions arise as DeepSeek pursues new capital to finance its computing infrastructure, model development, and the retention and recruitment of talent, in the context of escalating competition among prominent AI firms in China and the United States. DeepSeek is currently engaged in a funding round that would assign it a valuation of 500 billion yuan, as reported by source. The startup secured approximately $7.4 billion in June at a post-money valuation exceeding $50 billion, as indicated by sources and filings from investors. In the June round, DeepSeek founder Liang Wenfeng personally committed 20 billion yuan, while Tencent Holdings and battery company CATL.SZ contributed 10 billion yuan and 5 billion yuan, respectively, to emerge as the largest external shareholders, as reported by source.
DeepSeek’s initial public offering initiative arrives at a time when competitors, both domestically and internationally, are hastening to enter the public markets to secure funding. This urgency is driven by escalating expenses associated with competing in the artificial intelligence sector, which necessitates substantial investments in computing power, data center infrastructure, and engineering expertise. Chinese large language model developers Z.AI and MiniMax both went public in Hong Kong earlier this year. Beijing-based startup Moonshot has filed confidentially for a Hong Kong IPO, as reported by source. It was valued at $50 billion in a funding round, which is lower than DeepSeek and Z.AI, the latter having a market capitalisation of approximately $54 billion. Their valuations continue to be significantly lower than those pursued by their U.S. counterparts.
Claude and Mythos developer Anthropic may achieve a valuation of as much as $2 trillion in its initial public offering, according to certain investors, whereas OpenAI is projected to reach a valuation of up to $1 trillion in its forthcoming offering. The gap reflects a pronounced revenue disparity, highlighting the challenge faced by Chinese AI developers in translating their increasingly competitive technology into profit. Anthropic is set to initiate the offering in mid-October.and complete the listing prior to the midterm elections in November, a source reported this month. Founder Liang anticipates that the proceeds from the IPO will enable DeepSeek to provide enhanced incentives aimed at retaining essential staff and researchers, according to another source. The company has recently experienced a loss of talent to better-funded rivals, including ByteDance and Xiaomi.
