China’s space investors are sitting on billions of dollars of unrealised gains and may soon have a chance to cash out, says China space expert Dr David Dong Lu, founder and CEO of NQP Forces Promoting Soc (HK) Limited and formerly Director of Strategic Development with Beijing Commsat Technology Development Co., Ltd.
Speaking at a high-level seminar in Hong Kong, Dong said experts estimate the country now had around 300-600 private space companies – but with very few opportunities for early investors to exit.
The issue, he said, is Chinese private space companies grew rapidly in size to the point where only a public listing could offer an off-ramp to the early-stage investors.
“Most of these companies now, they are $1 billion or at least $100 million, it’s very rare to find new investors to come in and take that, so they are looking for public listing. If they are listed, at least they can trade,” he said.
Dong believes China’s path for private commercial firms will likely track that seen in the US in 2021 and 2022, where a lot of space companies delivered IPOs – even some with negligible profitability at the time.
“I think China will follow this scenario,” he told a room of investors and space entrepreneurs in Hong Kong’s fashionable Wan Chai district at an event organised by Orion Astropreneur Space Academy (OASA).
For China, Dong said, the benefits will be some diversification on the stock market. “We need new topics,” he said, joking that China’s markets needed “something other than semiconductors”.
According to Dong, a few top players are in the final stages preparing for IPO, including LandSpace, one of the first Chinese rocket companies, which publicly declared its intentions a few weeks ago.
Founded in 2015, LandSpace has secured funding from investors including venture capital firm HongShan, known at that time as Sequoia Capital China, the investment arm of Chinese property developer Country Garden and the state-backed China SME Development Fund, according to Reuters.
China’s space industry is complicated yet navigable, according to charts shared by Dong at the event. But the analyst said nobody really agrees exactly how many private space companies exist: purists say firms even remotely related to state-owned organisations or enterprises should not count while others say significant grants from, for example, the China Academy of Sciences don’t exclude a firm from being “private”. Dong’s own view is there are certainly “more than 300” private space firms.
Dong said one interesting shift of late has been a mini exodus of rocket firms from Beijing itself, with firms now spread across almost the whole country. In fact, data shows 54% of space firms have headquarters outside Beijing, with “Rocket Street” competing with strong efforts of other regional governments to attract new firms. “Jiangsu, for example, is really pushing hard in this industry, particularly in the manufacturing sector,” he said.
Finally, Dong had some interesting insights for China rookies, warning investors not to view any policy documents or Five Year Plans as “new” information. “If you see a policy, it’s already too late,” he said. “Once a policy is announced publicly, you know that technology has been possible in the industry for at least four or five years,” he said.
