HONG KONG / BEIJING (Reuters) – US-listed Chinese electric vehicle manufacturers (EVs), Li Auto Inc, Nio Inc and Xpeng Inc, plan to list in Hong Kong only this year and tap a growing investor base closer to home. with direct knowledge of the matter.
The people aim to sell at least 5% of the increased share capital in the Asian center each, the people said. Based on their market capitalization in New York on Monday, the return could be $ 5 billion.
The companies worked with advisers on the sales, which could start as early as the middle of the year, said one of the people who did not want to identify due to confidentiality restrictions.
Li Auto, Nio and Xpeng – which has raised $ 14.7 billion in US markets since 2018 – declined to comment. U.S. carmakers’ shares rose between 3.7% and 5.3% in early transactions.
The plans come as the trio increase capital raising to fund technology development and expand sales networks, to better compete in the world’s largest EV market where US counterpart Tesla Inc increases sales of China-made vehicles.
This year is crucial for EV manufacturers to capitalize on the market share, as the industry expects sales of new energy vehicles (NEVs) in China to increase by almost 40% from last year to 1.8 million units.
“Despite much richer financial resources now compared to a year ago, EV companies still need to invest heavily in next-generation technology,” said Shi Ji, analyst at Haitong International. “Investigating a secondary listing much closer to their home market is a good step.”
The sale of shares in Hong Kong would also add the trio to a number of Chinese companies listed in New York, who want to be in the midst of political tensions between China and the US on more local exchanges.
The increasing number of such listings “has improved the status of Hong Kong’s capital markets worldwide, and also helped issuers achieve higher valuations and raise more capital,” said Zhang Zihua, chief investment officer of Beijing Yunyi Asset.
COURSE RECORD
Under Hong Kong rules, a secondary listing requires at least two financial years of good compliance with regulations on another qualifying exchange.
Li Auto and Xpeng were launched in the United States mid-last year, and are likely to apply for a dual primary listing in Hong Kong, three people with direct knowledge said.
Under Hong Kong’s dual primary listing rules, companies are subject to full Hong Kong stock exchange requirements and a second stock exchange, but are not bound by the two-year condition.
Xpeng is also considering a third listing on the STAR market in Shanghai for new business ventures, two other people said.
“In the long run, it is useful for consumer-oriented businesses like us to connect with local capital markets and local investors,” Xpeng president Brian Gu told Reuters last week, declining to comment on any listing plan in Hong Kong.
“This is the direction we need to pay attention to.”
GO GREEN
The Chinese government has strongly promoted NEVs – such as battery-powered, plugged-in petrol-electric hybrid and hydrogen fuel cell motors – in response to chronic air pollution, which has encouraged the interest of technology companies and investors.
Last month, Reuters reported that telecommunications company Huawei Technologies Co Ltd plans to market EVs as early as this year.
China predicts NEVs will account for 20% of its annual car sales by 2025 from about 5% by 2020.
The delivery of local vehicles last year amounted to 32 624 by Li Auto, 43 728 by Nio and 27 041 by Xpeng. Compared to 147,445 Tesla vehicles, the operating data showed.
Reported by Julie Zhu and Scott Murdoch in Hong Kong, Yilei Sun in Beijing; Edited by Sumeet Chatterjee and Christopher Cushing