DeepSeek Hires CITIC Securities for IPO, Sources Say

CITIC Securities has been brought on board by Chinese AI company DeepSeek to initiate its IPO process, according to a Reuters report citing two informed sources. The technology firm is expected to launch the process this year, with the listing planned for Shanghai's STAR Market, which specialises in tech companies.

According to the sources, details such as the timing of any offering, the amount DeepSeek may seek to raise, and valuation targets remain undetermined at this point.

DeepSeek is currently in a funding round that would value the firm at about ¥500 billion or roughly $75 billion, a figure that has been in place since July.

Prior to the current round, DeepSeek raised roughly $7.4 billion in June with a post-money valuation of over $50 billion, as per investor filings. In this recent funding round, founder Liang Wenfeng personally committed ¥20 billion, while Tencent Holdings pledged ¥10 billion. Tencent is now the largest external shareholder in the company.

The move goes beyond simply raising cash.

DeepSeek, like numerous other AI firms, is seeing its capital needs escalate rapidly in the fast-moving environment. Significant expenditure is going into computing infrastructure, model development, talent acquisition, and proprietary chip design. These are exactly the fronts where the AI competition is becoming increasingly expensive.

Consequently, gaining access to the public markets has become strategically crucial.

A key market question, however, is whether investors will continue to finance DeepSeek's expansion at ever-higher valuations. The same query is currently being asked of nearly every AI-related company.

Worldwide, investors are growing more vocal in asking if the heavy investments in computing power and infrastructure will ultimately yield adequate profits.

DeepSeek might set a reference point for Chinese AI valuations.

Should the IPO succeed, it would provide public investors with something they currently lack confidence in and have little experience with: a clear valuation benchmark for a top Chinese frontier AI developer.

Just last week, Tencent-backed chipmaker Enflame saw online IPO demand that was over 6,000 times the number of shares available. This underscores the massive investor hunger within China's AI ecosystem.

As a result, DeepSeek could become an even bigger reference point in the future.

A possible trigger for the wider Chinese tech sector.

For Chinese stocks, the eventual IPO could strengthen the narrative that the nation's AI sector is shifting from a private venture capital story to a significant public market theme.

This could in turn encourage additional Chinese AI firms to pursue public listings.

That is one potential outcome and catalyst that could ignite the market. However, there is also considerable risk associated with such a landmark event.

Should several high-valuation AI firms come to market at the same time, investors might become more discerning in their capital allocation. Capital would then likely gravitate towards companies that show real commercialisation, not just technological potential.

That is a factor to keep in mind.

The eventual valuation will truly test the market.

Regardless of other factors, DeepSeek's final IPO valuation could arguably be more significant than the listing event itself.

At $75 billion, the valuation would already constitute a massive premium over many Chinese tech firms. Consequently, the company will face heightened scrutiny, with investors seeking extensive clarity on revenue growth, profit margins, computing costs, and how quickly DeepSeek can monetise its technology.

China still has a considerable distance to cover in matching the AI stock market presence that Wall Street has established. However, when it comes to recognising investor demands, the global pace is uniform. Currently, investors are pursuing firms that can demonstrate that their expenditure can yield sustainable profits. Such companies are expected to be increasingly favoured in the shift that has occurred over the last year.

Therefore, DeepSeek's IPO may serve as one of the most distinct tests of that transformation within China.

Regardless of whether it succeeds or fails, the eventual listing will at least provide markets with something previously absent: a public valuation for one of China's most closely watched AI contenders.