SCHEDULE 13D: Hesai Group Co-Founders Formalize Control Through New Concert Party Arrangement

Hesai Group's co-founders, including CEO Yifan Li, have formalized their collective control over the company's voting rights through a new concert party arrangement, as detailed in a recent Schedule 13D filing.

Summary

• Dr. Yifan Li and ALBJ Limited filed a Schedule 13D, reporting beneficial ownership in Hesai Group's Class B ordinary shares.
• The filing highlights a Deed of Concert Party Arrangement entered into on April 24, 2025, by Dr. Yifan Li, Dr. Kai Sun, and Mr. Shaoqing Xiang, who are co-founders of Hesai Group.
• Under this Deed, the parties agree to consult and exercise all voting rights and other powers of control unanimously in relation to resolutions of the Issuer, aiming to consolidate control of the Company.
• Dr. Yifan Li is deemed to have shared voting power over an aggregate of 27,163,892 shares, representing 20.5% of the Issuer's Class A and Class B ordinary shares combined as of March 31, 2025.
• This includes 8,879,636 Class A shares held by ALBJ Limited (wholly owned by Dr. Yifan Li), 9,228,622 Class A shares held by Fermat Star Limited (wholly owned by Dr. Kai Sun), 8,890,603 Class A shares held by Galbadia Limited (wholly owned by Mr. Shaoqing Xiang), and 165,031 Class B ordinary shares (ADSs) beneficially owned by Mr. Shaoqing Xiang.
• ALBJ Limited beneficially owns 8,879,636 Class A ordinary shares, representing 6.7% of the total voting power.
• Dr. Yifan Li, through ALBJ Limited, sold a total of 1,008,101 Class B ordinary shares in the form of ADSs in the open market between March 13, 2025, and March 24, 2025, at weighted average prices ranging from US$18.9 to US$21.3 per ADS.

Sentiment

Score: 6

Explanation: The formalization of a concert party arrangement among co-founders provides clarity on control and potentially stability, which is generally positive. However, recent insider share sales by a key reporting person could introduce a degree of caution, leading to a neutral to slightly positive sentiment.

Positives

• The formalization of a concert party arrangement among the co-founders provides clarity and stability regarding the company's control structure, potentially reducing uncertainty for investors.
• The agreement to act in concert and exercise unanimous voting rights can lead to more cohesive strategic decision-making and long-term vision for the company.

Negatives

• Recent sales of over 1 million ADSs by Dr. Yifan Li (through ALBJ Limited) in March 2025 could be perceived negatively by the market, potentially signaling a lack of confidence or a need for liquidity from a key insider.

Risks

• While the Deed aims for unanimity, any future disagreements or conflicts among the concert party members could potentially disrupt the company's governance and strategic direction.
• The concentration of voting power among a small group of co-founders, while providing stability, could also limit the influence of other shareholders on corporate decisions.

Future Outlook

The Deed of Concert Party Arrangement signifies a commitment by the co-founders to maintain consolidated control over Hesai Group, with an agreement to consult and vote unanimously on all significant company resolutions. This arrangement is intended to remain in force as long as the parties hold interests in the company, unless terminated by mutual agreement.

Management Comments

• Dr. Yifan Li, as Co-Founder, Director, and Chief Executive Officer of Hesai Group, along with Dr. Kai Sun and Mr. Shaoqing Xiang, entered into the Deed of Concert Party Arrangement to 'consult with each other and to exercise all voting rights and other powers of control available unanimously in relation to resolutions of the Issuer proposed to be passed,' aiming to 'cooperate to consolidate control of the Company.'

Industry Context

This filing primarily concerns corporate governance and beneficial ownership, rather than operational or financial performance. In the technology sector, particularly for companies with strong founder leadership, formalizing control structures like concert party arrangements can be a common practice to ensure long-term strategic alignment and stability, especially in the context of dual-class share structures.

Corporate Governance

Related Party Transactions

• The Deed of Concert Party Arrangement itself is a significant related party transaction, formalizing the voting and control agreement among the co-founders (Dr. Yifan Li, Dr. Kai Sun, and Mr. Shaoqing Xiang).
• The sales of Class B ordinary shares (ADSs) by ALBJ Limited, which is wholly owned by Dr. Yifan Li, constitute related party transactions.

Stakeholder Impact

• Shareholders: Gain clarity on the company's control structure and the consolidated voting power of the co-founders, which may influence perceptions of stability and long-term strategic direction. Recent insider sales might raise questions for some investors.
• Management: The formalization of the concert party arrangement reinforces the cohesive leadership and decision-making power among the co-founders, potentially streamlining strategic execution.

Next Steps

• The parties to the Deed of Concert Party Arrangement will continue to consult with each other and exercise their voting rights unanimously on all proposed resolutions of Hesai Group.
• The Deed will remain in effect until all parties mutually agree to terminate it or if any party ceases to beneficially hold interests in the Company.

Key Dates

Recommendation

Keywords

Hesai Group, Schedule 13D, Yifan Li, ALBJ Limited, Concert Party Arrangement, Beneficial Ownership, Corporate Governance, Shareholding, Voting Rights, Insider Sales, Class A Shares, Class B Shares