HONG KONG / BEIJING (Reuters) – US-listed Chinese electric vehicle (EV) manufacturers Li Auto Inc, Nio Inc and Xpeng Inc plan to get listed in Hong Kong this year, moving closer to a growing investor base tapping into a house with direct knowledge of the matter.
The trio aims to each sell at least 5% of the expanded share capital in the Asian hub, the people said. Based on their market cap in New York on Monday, the proceeds could reach $ 5 billion.
The companies have been working with advisers on the sale that could begin as early as mid-year, one of the people said, who declined to be identified due to confidentiality restrictions.
Li Auto, Nio and Xpeng – which have raised $ 14.7 billion in US markets since 2018 – declined to comment. US-quoted shares of the three automakers rose between 3.7% and 5.3% on early deals.
The plans come as the trio ramps up capital-raising efforts to fund technology development and expand sales networks, to better compete in the world’s largest EV market, where US counterpart Tesla Inc is driving sales of its China-made vehicles.
This year will be crucial for EV manufacturers to gain market share as the industry expects Chinese sales of new energy vehicles (NEVs) to increase nearly 40% from last year to 1.8 million units.
“Despite much richer financial resources now compared to a year ago, EV start-ups still need to invest heavily in next-generation technology,” said Haitong International analyst Shi Ji. “Exploring a secondary listing much closer to their home market, if any, is a good move.”
Selling shares in Hong Kong would also add the trio to a slew of Chinese companies listed in New York looking for more local exchanges amid Chinese-American political tensions.
The rising number of such listings “has improved the status of Hong Kong’s global capital markets and also helped issuers achieve higher valuations and raise more capital,” said Zhang Zihua, chief investment officer at Beijing Yunyi Asset.
TRACK RECORD
Under Hong Kong rules, a secondary listing requires at least two financial years of good regulatory compliance on any other eligible exchange.
Li Auto and Xpeng went public in the United States in the middle of last year and are therefore likely to file for a dual primary listing in Hong Kong, said three people with direct knowledge of the case.
Under Hong Kong 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 requirement.
Xpeng is also considering a third listing on the STAR market in Shanghai for new economy companies, two other people said.
“In the long run, it is helpful for consumer-facing companies like us to engage with domestic capital markets and domestic investors,” Xpeng president Brian Gu told Reuters last week, who declined to comment on a Hong Kong listing plan. .
“This is the direction we should pay attention to.”
GOING GREEN
The Chinese government has strongly promoted NEVs – such as battery-powered, plug-in gasoline-electric hybrid and hydrogen fuel cell cars – in response to chronic air pollution, sparking interest from technology companies and investors alike.
Last month, Reuters reported that telecommunications company Huawei Technologies Co Ltd plans to launch EVs as early as this year.
China predicts that NEVs will make up 20% of annual car sales by 2025, up from about 5% in 2020.
Domestic vehicle deliveries last year were 32,624 by Li Auto, 43,728 by Nio and 27,041 by Xpeng. That compared to 147,445 vehicles by Tesla, industry data showed.
Reporting by Julie Zhu and Scott Murdoch in Hong Kong, Yilei Sun in Beijing; Adaptation by Sumeet Chatterjee and Christopher Cushing