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
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.
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.
NIO did not immediately respond to a request for comment.
Widely seen as the closest competitor to Tesla in China, NIO is one of the most prominent electric-vehicle makers in the country and is well placed to benefit from government policies that aim to encourage rapid consumer adoption of electric cars.
According to Bloomberg Intelligence analyst Francis Chan, these troubles may not dissipate any time soon, as Chinese ports, which are key bottlenecks, are still at risk of being shut due to Covid outbreaks.
Proceeds from any sales under the new plan can help NIO pay down debt and lower its interest expense by about 90 per cent, Bloomberg Intelligence analyst Steve Man said in an interview, freeing up money to invest in priorities like research and its distribution network.
Man does not see the offering signalling any trouble for the EV company’s Hong Kong plans.
“The Hong Kong IPO is less about money-raising, but more about listing in Greater China,” he said.