Chinese start-up Moonshot AI has reportedly told investors it plans to unwind its offshore corporate structure ahead of a planned IPO, in the latest move to signal increased regulatory pressure around foreign investment in tech firms.
Beijing-based Moonshot told investors in an email this week that it plans to remove its variable interest entity (VIE) structure, known as a red-chip structure, and sought feedback, Bloomberg and The South China Morning Post reported.
The VIE structure has been used for decades to give foreign investors exposure to Chinese companies, particularly in areas that would otherwise be subject to foreign ownership restrictions, such as telecoms or internet firms.
Foreign investment
Companies typically set up an offshore holding entity in a jurisdiction such as the Cayman Islands, which controls a Hong Kong subsidiary. That subsidiary then establishes a foreign-owned enterprise in mainland China, which controls a business through contracts rather than ownership.
