If you thought SPACs were supposed to be the quick and easy path to going public, nobody told that to Seyond Holdings Ltd. (2665.HK). The U.S.-based maker of LiDAR sensors used in autonomous driving just wrapped up a backdoor listing in Hong Kong that took nearly a year from deal signing to completion. So much for the fast track.

Seyond officially became a listed company last Wednesday, earning the distinction of being only the third firm to successfully go public in Hong Kong through a SPAC merger since the exchange launched its program four years ago. That's not exactly a thriving ecosystem. The company merged with TechStar Acquisition Corp., one of those shell companies that exists solely to help real businesses inherit a public listing status through reverse mergers.

The whole point of SPACs is that they're supposed to bypass the cumbersome requirements of traditional IPOs. In the U.S., these deals have boomed precisely because they offer cash-strapped tech startups a relatively hassle-free and less expensive route to public markets. But Seyond's experience shows that Hong Kong's version of the SPAC playbook reads very differently.

Why Hong Kong Instead of the U.S.?

Seyond originally planned to list in the U.S. in 2023 but pivoted to Hong Kong when it became clear that Washington's regulatory climate toward China-linked companies was turning increasingly hostile. Technology companies have been caught in the crossfire of U.S.-China tensions, with national security concerns layered on top of economic rivalry. For a company that gets most of its business in China, pursuing a U.S. listing started looking like more trouble than it was worth.

Hong Kong's SPAC program, rolled out at the beginning of 2022, must have seemed like an attractive alternative. Except it turns out that the Hong Kong Stock Exchange runs a tight ship when it comes to vetting companies that want to come public through the back door. The exchange subjects SPAC candidates to strict review processes designed to protect investors from companies that might not meet its listing standards.

Making matters more complicated, all Chinese companies seeking overseas listings, including in Hong Kong, need approval from mainland authorities. Seyond technically isn't based in China, but it still falls under the purview of the China Securities Regulatory Commission because of where it does business. The CSRC didn't give Seyond the green light until October, a full 10 months after the company signed its merger deal with TechStar. The Hong Kong Stock Exchange approved the listing the following month.

A Track Record of Delays

Seyond's lengthy wait isn't an isolated case. The Hong Kong Stock Exchange completed its first de-SPAC merger in October of last year, nearly three years after launching the program. That deal involved Singapore-based e-commerce company Synagistics (2562.HK) and moved relatively quickly by Hong Kong standards, taking just four months from merger agreement to listing.

Since then, traffic has been slow. The only other company to complete a SPAC merger before Seyond was ZG Group (6676.HK), an operator of a steel trading platform. ZG Group struck Hong Kong's first-ever SPAC deal way back in 2022 but didn't actually become a listed company until March of this year. That's patience on another level entirely.

Investment Red Flags

It's unclear exactly what caused the regulatory delays for Seyond, but from a pure investment standpoint, there are some concerning signs worth noting.

Start with revenue growth, which is losing steam fast. Seyond's sales increased 32% to $160 million last year, according to a prospectus filed by TechStar in August. That sounds decent until you realize it represents a sharp deceleration from 83% growth in 2023. Even worse, revenue actually contracted year-over-year in the first quarter of 2025. And the company isn't profitable. Annual losses widened every year from 2022 through 2024, though there was some good news in the first quarter of this year when Seyond turned a gross profit and trimmed its net loss.

The competitive landscape doesn't make things easier. Seyond ranks as the fourth largest LiDAR maker in China with roughly 21% market share, according to third-party data. Globally, its position is shakier at just 8.4% share. That means Seyond is battling a handful of major manufacturers for industry dominance while also fending off numerous smaller competitors, often through price cuts that squeeze margins.

Seyond's technological choices add another layer of difficulty. The company focuses on 1,550-nanometer LiDAR systems, which offer longer range and better resistance to interference but cost significantly more to manufacture than the 905-nanometer technology used by larger competitors Hesai (HSAI) and Robosense (2498.HK). That technological difference has given those two rivals much better gross margins than Seyond enjoys.

Perhaps trying to address this margin problem, Seyond showcased a 905-nanometer product at the Consumer Electronics Show in Las Vegas earlier this year. That move prompted Hesai to sue Seyond in October for alleged patent infringement, highlighting the legal risks that come with operating in patent-heavy industries like autonomous driving technology.

Market Enthusiasm Despite the Fundamentals

Despite all these concerns, Seyond shares have jumped about 75% since their official debut on December 10. The stock currently trades at a price-to-sales ratio of roughly 18 based on 2024 revenue. That's well above the 7.2 multiple for Hesai's Hong Kong-listed shares and 8.8 for Robosense.

Investors seem to be taking a glass-half-full view of Seyond for now, treating it as a fresh way to play the potentially promising autonomous driving technology sector. Newly minted SPAC listings also tend to be volatile as investors get familiar with the newly public company and digest information about its actual business performance.

As Seyond starts providing regular updates and reality sets in, the current euphoria might give way to something more measured. The company survived its marathon journey to public markets, but the real test is whether it can deliver the growth and profitability that justify its premium valuation. For patient investors who stuck around through the year-long wait, the next chapter should be revealing.