On October 24th, Horizon Robotics, a smart driving company (9660.HK), officially landed on the Hong Kong Stock Exchange with an opening price of HK$5.12 per share, 28.3% higher than the IPO price, with a market cap of nearly 70 billion Hong Kong dollars as of the time of publication.

As a leading technology company in the smart driving field, Horizon Robotics (9660.HK) has gathered a group of investors behind it, including a well-established and dynamic PE fund - Huangpu River Capital.

Data from Caishang Venture Capital Network shows that Huangpu River Capital was established in 2015 by a group of senior financial industry professionals, with total assets under management exceeding 6 billion US dollars, focusing on unicorn investments in multiple niche areas.

In the field of smart driving, Huangpu River Capital has successively invested in two unicorn companies, Hesai Technology (HSAI) and Horizon Robotics (9660.HK).

In February 2023, Hesai Technology successfully listed on the US Nasdaq stock market. Huangpu River Capital, which participated in its Series A financing in 2017, has exited. Now, with the listing of Horizon Robotics (9660.HK) in the smart driving field, Huangpu River Capital has gained another IPO.

Recently, reporters from the Star Market Daily visited this well-established PE institution and had an in-depth conversation with Zhao Bowen, the founder and chairman of Huangpu River Capital, to understand the story behind Horizon's investment and the unique investment strategy of Huangpu River Capital.

Decisively enter the market, investing in companies that master core technologies.

Going back to 2021, at that time the artificial intelligence market was developing rapidly. In the field of smart driving, the global smart automobile market reached 400 billion US dollars that year and is expected to exceed 1.2 trillion US dollars by 2030.

"In the early days of the outbreak of the smart driving track, this area was the direction we focused on," recalled Zhao Bowen, founder of Huangpu River Capital.

Zhao Bowen stated that Huangpu River Capital has always closely followed domestic alternatives to imports, unicorn companies in the artificial intelligence field, and has been looking for leading figures in Chinese artificial intelligence. Yu Kai, the founder of Horizon Robotics, has won international artificial intelligence evaluation championships such as ImageNet and Pascal VOC, and is the first Chinese scientist to lead a team to win championships in these internationally renowned competitions. In the research and contact with the smart driving field, Huangpu River started to pay attention to Yu Kai and Horizon Robotics.

"Having a forward-looking and profound understanding of the industry they are in has always been a specific portrait that Huangpu River Capital looks for in outstanding founders. It symbolizes the founder's judgment on future technological developments and the status of product implementation. This is extremely important," said Zhao Bowen.

During the communication process, the investment committee of Huangpu River Capital highly recognized Dr. Yu Kai's views on artificial intelligence and the future direction of smart driving. Through continuous in-depth interaction between the two teams, Huangpu River decisively chose to bet on Horizon Robotics, investing in and accompanying its growth together.

According to Zhao Bowen, the reason why it is described as a "decisive choice" is due to smart driving having experienced the first wave of the artificial intelligence wave, but still being in the early stages before fully erupting.

In 2017, Tesla led the first wave of smart driving technology development, gradually realizing intelligent driving functions from L2 to L5 levels through a pure visual technology route and integrated system design of software and hardware. "We believe that after the dissipation of the first wave of valuation bubbles, smart driving will definitely usher in a second, larger wave under technological progress, with the fusion of artificial intelligence and the field of travel bursting with enormous potential."

In terms of timing, Zhao Bowen believes that the contact between Huangpu River Capital and Horizon Line happens to be on the eve of the outbreak of the second big wave.

"As a leading domestic automobile intelligent driving chip company, Horizon Line has independently developed artificial intelligence chips and algorithms, which align with Huangpu River Capital's consistent investment philosophy of investing in companies with core technologies; moreover, Horizon Line has strong commercial implementation capabilities, with a market share in the Chinese intelligent driving chip market of 35%-40%, demonstrating the potential to become an industry leader."

Huangpu River Capital believes that the future intelligent driving market will concentrate on leading companies; furthermore, Horizon Line has an excellent team, with founder Yu Kai being an authority in the field of artificial intelligence, leading a team with a strong technical background and international vision.

"It can be said that technological core, leading the commercialization, and excellent team are important reasons Huangpu River Capital chose to accompany Horizon Line in its growth. Thus, after accompanying Horizon Line for 3 years, Huangpu River Capital reaps an IPO," Zhao Bowen clearly expressed to a reporter from "Star Daily."

Investment Strategy: Focus on leading companies in the major sectors

Not only in the artificial intelligence field, but also in areas such as integrated circuits, biomedical, and internet, Huangpu River Capital follows the strategy of "selecting leading companies or key chain enterprises in major sectors" for investment.

On the "achievement wall" in Huangpu River Capital's conference room, reporters from "Star Daily" saw that Montage Technology, Yitang Semiconductor, Illumina (Grail), Horizon Line, Bitmain, Farfetch, PDD Holdings, Bei Kai Kangcheng, etc., are all impressive investment achievements of Huangpu River Capital in recent years.

"95% exit rate is the return to LP given by Huangpu River Capital," Zhao Bowen said. Behind this achievement is the unique investment style of Huangpu River Capital.

Zhao Bowen told reporters from Science and Technology Innovation Board Daily that at the front end of investment, Huangpu River Capital insists on conducting in-depth research on industries and technologies. When the technology and market are not yet mature, they lay out early to capture unicorn companies and continue to empower their growth.

When looking for targets, focus on industry leaders and chain-leading companies, matching capital with teams and companies that have ideals, technology, and strength; in the investment process, decision-making is decisive and actions are prompt.

In Zhao Bowen's view, investment is not a one-sided action but rather the establishment of a cooperative relationship based on mutual trust. "When facing high-quality projects, Huangpu River Capital not only provides financial support but also carries out comprehensive resource integration."

"On the one hand, adhering to the value investment philosophy, focusing on the intrinsic value and long-term development potential of the company; on the other hand, using its strong resource endowment and global vision, helping companies expand their business globally, continuously creating value for investors and invested companies, achieving win-win situations."

Regarding the investment in Horizon, Science and Technology Innovation Board Daily noted that Huangpu River Capital led the Series C round for Horizon. After the investment, Zhao Bowen stated that at key strategic points for Horizon, Huangpu River Capital provided financial support and also assisted Horizon's rapid growth through resource integration and strategic guidance.

According to Zhishizixun data, Horizon began mass production of solutions in 2021. Calculated by the total installed capacity of the solution, Horizon is the first and largest Chinese company to provide pre-installed mass production of advanced auxiliary driving and high-level autonomous driving solutions annually.

It can be seen that helping the invested companies achieve a leap from '10 to 100' and achieve rapid growth is the primary strategy of Huangpu River Capital in selecting leading companies and focusing on growth stage investments.

The 'Nine-grid' investment philosophy guides the flow of capital to real businesses.

Horizon is just one of many successful investments on the Huangpu River. When discussing the specific investment targets, Zhao Bowen also showed his original 'Nine-grid' investment philosophy to the reporter of 'Star Market Daily'.

The 'Nine-grid' investment philosophy specifically includes going along with the trend, leading change, market leader, outstanding team, high growth potential, core technology, reasonable valuation, quality shareholders, and clear exit path.

Zhao Bowen told the reporter of 'Star Market Daily' that in the 'Nine-grid', going along with the trend and leading change are the major trend backgrounds, meaning they must comply with the global, China, and industry development directions. Market leaders and outstanding teams are chosen as key enterprises within the major development direction, with core teams composed of academicians, scientists, and other top talents. High growth potential and core technology focus on companies with continuous revenue and profit growth during the growth period, validating that core technology drives product success.

Regarding reasonable valuation, quality shareholders, and clear exit path, Zhao Bowen stated that for companies in the growth stage, valuations will not be as low as in the early stages. However, for an institution with valuation strategy anchoring and two-way empowerment, finding the right entry price is the core capability of Huangpu River Capital in investing on the eve of a company's breakout.

Also, in terms of strategy, adhering to considering exit strategies when investing ensures the proper cycle of funds and investor interests, which has been an important investment logic for Huangpu River Capital to continuously achieve good investment results.

"Huangpu River Capital's investments are not only superficial financial returns but also the matching of capital with teams and companies that have ideals, technology, and strength, guiding capital towards real businesses that create value for the country and the people," Zhao Bowen concluded.