Chinese EV start-up NIO seeks quicker secondary listing in Hong Kong via introduction, skips fundraising
- Companies that seek a listing by introduction are able to do so because their existing shares are already widely held
- Shanghai-based carmaker has applied for a listing by way of introduction in Singapore as well
The carmaker, which has sought a secondary listing outside New York amid the looming risk of a delisting in the US, is the only US-listed Chinese EV maker that has opted for a secondary listing without selling new shares or raising new funds. If the listing goes as planned, its shares will be listed on the main board in Hong Kong on March 10, under the stock code “9866”.
Companies that seek a listing by introduction are able to do so often because their existing shares are already widely held, so that there will already be an open market for their shares after the new listing, even without marketing arrangements by underwriters.
“If the company is focused more on getting a faster listing, rather than on fundraising, listing by introduction is an alternative option for US-listed Chinese companies to secure a ‘plan B’ amid regulatory uncertainties and potential delistings,” said Bruce Pang, the Hong Kong-based head of macro and strategy research at investment bank China Renaissance.
Founded in 2014, NIO said in a prospectus filed to the Hong Kong bourse on Monday that it started generating a positive cash flow in 2020 and the nine months of 2021. It further disclosed that it had also applied for a listing in Singapore, also by way of introduction.
“Our Directors consider that it would be desirable and beneficial for our company to apply for a secondary listing on the stock exchange by way of introduction, as the stock markets in Hong Kong and the United States attract different investors,” NIO said in the prospectus.
Morgan Stanley, Credit Suisse and CICC are the joint sponsors of the deal.
China reported sales of 2.99 million new-energy vehicles (NEVs) – comprising pure electric, plug-in hybrid and fuel-cell cars – in 2021, a jump of 169 per cent year on year.
And as a rising number of drivers consider replacing their conventional cars with EVs, the delivery volume of such vehicles is expected to top 5.5 million units this year, up 84 per cent from 2021, according to Cui Dongshu, general secretary of the China Passenger Car Association.
For the nine months ended September 2021, Nio reported a net loss attributable to shareholders of 8.6 billion yuan (US$1.3 billion), widening from 4 billion yuan in the same period a year ago.
Bin Li, co-founder and CEO, owns 10.6 per cent of NIO and is its largest single shareholder. Chinese social media giant Tencent Holdings owns a 9.8 per cent stake, according to the prospectus.