TuSimple raises $1.1B in IPO sales ahead of bell-ringing public debut

Prior to its initial public offering (IPO), the San Diego-based startup privately raised $800 million over five years. Most of that came in recent months as it pulled in investments by major fleets, railroads and truck manufacturers Navistar International Corp. (NYSE: NAV) and its German parent TRATON Group (OTC: TRATF)

TuSimple confidentially filed its prospectus with the Securities and Exchange Commission (SEC) in December. With the commission’s blessing, the company made its plans public in March.TuSimple executives ring the bell to open NASDAQ trading Thursday.

Passing on SPACing

TuSimple passed on riding the wave of special purpose acquisition companies (SPACs) — shell companies that raise money in an IPO and have two years to identify a merger target — to take the traditional IPO route. 

It may be a wise move. SPACs are coming under increasing scrutiny over how much their sponsors charge in the so-called “promote” — as much as 20% of the new companies’ shares — and liability protection for business projections disallowed in a traditional IPO.

TuSimple had a valuation of $7.85 billion based on the midpoint of a $35 to $39 share price range announced April 7. It generated $1.8 million in revenue from autonomous freight runs  with 50 Level 4 autonomous trucks in the American Southwest. All of its trucks have a safety driver on board. But it plans to go “driver out” this year.

TuSimple lost $178 million in 2020 on a proforma basis.

China questions

Sun Dreams Inc., an affiliate of Chinese online media firm Sina Corp., is TuSimple’s largest shareholder. Its 20% stake brought scrutiny by the Committee on Foreign Investment in the United States (CFIUS). The committee is required to investigate any investment by a foreign entity that exceeds 10% ownership to determine if it raises national security concerns.

Sun Dreams sold about 6.76 million shares, worth about $270 million. Sina has two seats on TuSimple’s board of directors. TuSimple sold 27 million shares. Underwriters if the IPO have a 30-day option to purchase up to an additional 5,067,567 shares of Class A common stock from Sun Dreams/Sina.

Self-driving truck software competitor Plus may face similar scrutiny should it decide to go public. Plus reportedly has been in discussions with unnamed SPACs about a reverse merger, according to Bloomberg. Plus has significant Chinese investment and a joint venture with China state-owned First Auto Works.

The Information reported this week that China’s Didi Chuxing quietly purchased another autonomous startup, Aurora Innovation, for $1 billion in 2017. But the sale was aborted after CFIUS investigated. Aurora, led by self-driving software pioneer Chris Urmson, is worth a reported $10 billion today. 

Attracting investors

TuSimple’s latest private Series E funding round totaled $546 million. That included $363 million in direct investment, $50 million from a convertible loan and $183 million from warrants in private company stock exercised by Navistar and TRATON.

Navistar owns 5% of TuSimple. TRATON owns  2% to 3%. Together, they own 15,782,220 shares. 

TuSimple and Navistar are targeting 2024 to produce the first Level 4 — high-autonomy — truck for commercialization. They have 570 nonbinding orders.

TuSimple’s stable of investors includes major carriers United Parcel Service (NYSE: UPS),  Schneider National (NYSE: SNDR), Werner Enterprises (NASDAQ: WERN) and U.S. Xpress (NYSE: USX). Class 1 railways CN (NYSE: CNI) and Union Pacific (NYSE: UNP), tire maker Goodyear (NASDAQ: GT) and chipmaker Nvidia (NASDAQ: NVDA) also are investors.

Founders control decisions

Executive Chairman Mo Chen and Chief Technology Officer Xiaodi Hou founded TuSimple in 2015. Both were born in China. Chen holds Canadian and American citizenship. Hou is an American citizen. The two own 62.5% of the voting stock, which gives them decision-making power over practically any company decision.

Chen and Hou’s Class B shares carry 10 votes compared to one vote for Class A shares… If Chen or Hou sells any Class B shares, they convert to Class A shares with one vote.

TuSimple currently has 800 employees, 600 in the U.S. and 200 in Europe and China, where it operates 20 autonomous trucks.

Related articles:

TuSimple seeks to raise up to $1.5B in IPO stock sale

Self-driving truck startup TuSimple files for public ownership

VectoIQ, U.S. XPress leaders included on TuSimple executive advisory board

Click for more FreightWaves articles by Alan Adler.

‘