EV Maker Xpeng Seeks Up to $2 Billion in Hong Kong Listing

New York-traded electric-vehicle maker Xpeng Inc. is looking to raise as much as $1.97 billion for a listing in Hong Kong, putting it on track to be the first Chinese EV producer to complete a so-called homecoming share sale.

Xpeng is selling 85 million shares in the offering and set a maximum price of HK$180 for the portion reserved for Hong Kong investors, according to a filing with the U.S. Securities and Exchange Commission. That’s a premium of about 11% to Wednesday’s closing price of $41.61 of Xpeng’s American depositary receipts. One ADR is equivalent to two ordinary shares.

The deal puts Xpeng farthest along among the three U.S.-listed Chinese EV makers aiming for a dual listing. Nio Inc. and Li Auto Inc. are also planning sales in the city, Bloomberg News has reported.

Guangzhou-based Xpeng joins a stream of U.S.-traded Chinese firms seeking similar footholds in Hong Kong, which provide a hedge against the risk of being kicked off American exchanges while broadening their investor base closer to home. About $37.5 billion has been raised through such homecoming-listings since Alibaba Group Holding Ltd. pioneered the trend in late 2019.

Xpeng went public in New York via a $1.72 billion initial public offering in August. That timespan will make its Hong Kong listing dual primary instead of secondary, unlike the other homecoming listings, which require at least two years of trading on another exchange.

Xpeng raised a further $2.5 billion in a share placement in December, highlighting the high cost of electric-vehicle manufacturing. Riding the wave of a phenomenal share rally last year, EV makers raised billions of dollars through stock offerings as well as bank loans.

Xpeng’s stock has declined 42% from a Nov. 23 peak but is still up 177% from its IPO price, giving it a market value of $33 billion.

After the rally in 2020, electric car-makers have seen their shares decline this year amid increasing competition from legacy automakers, the global semiconductor shortage and general wariness among investors about holding onto riskier assets.

Xpeng competes with an array of upstarts in China -- the world’s largest market for electric vehicles -- as tech giants, traditional carmakers and startups muscle into the sector.

Xpeng has yet to turn a profit, pledging to break even by late 2023 or 2024. Revenue has been increasing, however, reaching 2.95 billion yuan in the first quarter, with deliveries in May growing 483% compared to the same month a year earlier.

It plans to use the proceeds from the Hong Kong offering to expand its product portfolio and develop more advanced technology, develop new models and improve hardware technology, accelerate business expansion, broaden its sales, services and super charging network, expand its presence in international markets starting with some European ones, enhance its production capability and general corporate purposes.

JPMorgan Chase & Co. and Bank of America Corp. are joint sponsors for the offering. Final pricing is slated for June 30, with trading in Hong Kong scheduled for July 7.

©2021 Bloomberg L.P.

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