Chinese electric vehicle start-up Li Auto raises US$750 million from bond sale for new product development
- The convertible bonds carry an annual interest rate of 0.25 per cent
- Analysts say start-up needs to invest as it faces increased competition in coming years
Li Auto, one of the Chinese start-ups vying to grab a bigger slice of the world’s largest electric vehicles market, has raised US$750 million by selling a convertible bond to fund new products and technology.
The paper issued by the Beijing-based firm backed by mainland online services delivery giant Meituan carries an annual interest rate of 0.25 per cent, it said in a statement on Thursday.
Before its maturity on May 1, 2028, investors can opt to convert it into Li Auto shares at US$28.34 per American depositary share, a 27.5 per cent premium to the closing price on Wednesday.
The proceeds will fund research and development of new electric vehicle models and technologies, besides bolstering working capital.
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David Zhang, an analyst with North China University of Technology’s research centre for automobile industry innovation, said Chinese EV start-ups, including Li Auto, are under pressure to raise capital to better compete with technology giants like search engine giant Baidu and smartphones developer Xiaomi.