Jouav Automation Tech Co. Ltd., China's second-largest industrial drone manufacturer, will soon list on the technology-focused Shanghai STAR Market and is looking to raise 451 million yuan ($66 million).
The date for the initial public offering remains subject to approval. Jouav plans to spend most of the proceeds on a new Chengdu factory.
Jointly founded by Bill Ren, Peter Wang and Chen Peng in 2010, Jouav sells unmanned aerial vehicles, or UAVs, to more than a thousand clients worldwide, including China state-owned groups.
Jouav recorded roughly $31 million in revenue last year - most of which came from drone sales and fee for servicing them, according to the company's prospectus.
The company's most popular products do surveying and mapping. Vertical-take-off-and-landing fixed-wing drones work well for surveillance and Jouav's CW-20 model is used to patrol China's borders - including the Xinjiang region which is home to government "re-education camps" for the majority ethnic Uiyghur population.
In addition to its existing Chengdu factory, Jouav operates a pilot training facility and an air-traffic-management center with 24 teachers.
Company representatives from Jouav declined to comment on news of the listing.
Tough Competition
While technically the second largest drone manufacturer in China, the distance between No. 1 and No. 2 is large.
The drone market share held by Jouav is about 5% - tiny compared with the largest manufacturer DJI which makes more than half the UAVs in China.
Worldwide, DJI has a 75.4% share of the commercial drone market, according to company representatives. But Jouav is undeterred.
It has zeroed in on fixed-wing drones - something not made by DJI. Fixed-wing drones account for more than 70% of the sector's flight controller market, factsheets compiled by Jouav showed.
A small customer base propelled Jouav to this point. South Surveying & Mapping Technology and Shanghai Huace Navigation Tech Ltd., account for more than half of Jouav's sales.
The companies contributed 23.6% and 31%, respectively, to the drone maker's annual revenue last year, financial filings included in the prospectus said.
Government affiliated companies account for the remainder. Jouav chief executive Bill Ren leveraged connections formed while serving in the China military between 1993 and 2006 to get clients such as the China Earthquake Administration and the Ministry of National Resources.
The Next Victim Of Political Feuding?
However, Jouav's bid to overtake DJI as China's largest drone maker comes at a difficult time for a China company. Sections of the company's supply chain leaves Jouav vulnerable to escalating China-U.S. tensions with approximately half of its camera lenses and a third of its processing chips coming from outside China.
And Jouav's close government ties, while helpful for getting contracts, may also weigh on the manufacturer as it looks to increase its international clients.
But the company's decision to launch an initial public offering now reflects an optimism shared by other China companies that have launched share issues since the pandemic receded on the mainland.
Shanghai's technology-centered STAR market is heating up. Jack Ma's Ant Group bid to hold a share sale on the Shanghai STAR market was accepted last week - the most recent big company to choose the exchange.
