NIO’s shares tumble as US$2 billion top-up fundraising in New York signals delay in Hong Kong secondary stock sale

NIO plans to sell up to US$2 billion of American depositary shares in a top-up offering, the biggest sale by a Chinese company since Didi sale in June

Shares of the electric carmaker dropped by as much as 6.3 per cent in New York

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|NIO’s ES8 all-electric sports-utility vehicle in Shanghai on Tuesday, March 16, 2021. Photo: Bloomberg

Published: 10:15am, 9 Sep 2021Updated: 9:35pm, 9 Sep 2021

NIO retreated the most in nearly three weeks after unveiling the biggest US fundraising plan by a Chinese firm since Didi Global.

Shares in the electric carmaker dropped as much as 6.3 per cent Wednesday after it announced plans to sell up to US$2 billion of American depositary shares, which would boost its cash holdings amid supply-chain disruptions and ahead of its planned Hong Kong listing. The company’s plan for an at-the-market offering adds to a banner year for such deals. Unlike traditional stock offerings that cater to institutional investors in one large transaction, these plans let companies sell shares in the open market over time.

If completed, NIO’s deal would be the biggest US equity offering by a Chinese firm since Didi’s now-infamous initial public offering in June. US stock sales by companies based in China have dwindled since the ride-hailing company’s debut sparked a regulatory crackdown that weighed on investor sentiment. That sent the Nasdaq Golden Dragon China Index down by over 30 per cent between July 6 and its low on August 19.

NIO’s US plan follows a different approach to fundraising by its rivals. Peer Li Auto raised US$1.5 billion as part of a Hong Kong listing last month, while XPeng did the same in June.

People familiar with the matter told Bloomberg in March that NIO was also considering listing on a second exchange, but this week’s offering could signal a lack of progress.

“We think this could reflect further delays in the Hong Kong listing process,” Deutsche Bank analyst Edison Yu wrote in a note.