Fez– Chinese artificial intelligence startup StepFun is moving to dismantle its offshore corporate structure as it prepares for a potential initial public offering in Hong Kong.
According to Reuters, the Shanghai-based company, known for developing large-scale foundation models, is shifting toward an onshore structure that better aligns with its state-backed ownership.
The decision follows recent guidance from China Securities Regulatory Commission urging certain “red-chip” firms to unwind offshore entities, typically registered in jurisdictions such as the Cayman Islands, while maintaining core operations in China.
The regulatory push is forcing a reassessment across China’s technology sector. Red-chip structures have long been used by Chinese firms to access foreign capital markets, but authorities are now seeking closer alignment between corporate domicile and operational base.
Market participants warn that the transition could delay listings or, in some cases, derail IPO plans altogether due to the legal and financial complexity involved.
For StepFun, the shift is strategic. The company counts state-linked investment vehicles among its backers, alongside private capital and major technology players including Tencent Holdings.
Founded in 2023 by former Microsoft executive Jiang Daxin, the firm has quickly positioned itself among China’s emerging leaders in generative AI.
Its latest model, Step 3.5 Flash, has gained traction on developer platforms, while partnerships with handset maker OPPO and automaker Geely have extended its technology into consumer devices and vehicle operating systems.
The company has also strengthened its leadership team with the appointment of Yin Qi as president earlier this year.
The restructuring comes as Hong Kong’s equity market regains momentum. After a sharp rebound in 2025, with fundraising volumes surging, a growing pipeline of mainland Chinese firms is preparing to list.
Investor appetite remains particularly strong for companies in artificial intelligence and semiconductors, sectors seen as central to China’s long-term industrial strategy.
StepFun is reportedly targeting a multi-billion-dollar valuation for its listing, following earlier fundraising plans that placed its worth in the upper single-digit billions.
While timelines remain fluid, the company is said to be working toward a Hong Kong filing in the coming months.
The regulatory shift is not limited to StepFun. Other technology firms are also reviewing their structures. Among them is Moonshot AI, the developer of the Kimi large language model, which is weighing whether to abandon its own offshore setup.
The company is also pursuing fresh funding at a significantly higher valuation, pointing to sustained investor demand despite regulatory uncertainty.
Together, these developments signal a broader recalibration in how Chinese technology firms access global capital.
As Beijing tightens control, companies face growing pressure to balance regulatory compliance with market ambitions, reshaping the path to public listings in the process.
