Chinese EV trio eyes HK listings this year to raise combined US$5b

Hong Kong

US-LISTED Chinese electric-vehicle (EV) makers Li Auto, Nio and Xpeng plan to list in Hong Kong as soon as this year, to tap an investor base closer to home, said three people with direct knowledge of the matter.

Each of the trio aims to sell at least 5 per cent of their enlarged share capital in the Asian financial hub, the sources said.

Based on their New York market capitalisation on Monday, proceeds could total around US$5 billion.

The EV makers have been working with advisers on the sales, which could begin as early as mid-year, one of the sources said. The three are looking to take advantage of growing demand from prospective investors in Asia, said another of the sources, who declined to be identified due to confidentiality constraints.

Li Auto, Nio and Xpeng declined to comment.

The plans come as the trio increases capital raising efforts to fund technology development and expand sales networks, to better compete in the world's biggest EV market where US peer Tesla is boosting sales of its China-made vehicles. Auto executives have marked 2021 as a crucial year for EV makers to seize market share as the industry expects Chinese sales of new-energy vehicles (NEVs) to jump almost 40 per cent from last year to 1.8 million units.

Selling shares in Hong Kong would also add the trio to a slew of New York-listed Chinese firms seeking a presence on more local exchanges against a backdrop of political tension between the United States and China. Under Hong Kong rules, an issuer seeking a secondary listing must have had at least two financial years of good regulatory compliance on another qualifying exchange.

Li Auto and Xpeng went public in the US in the middle of last year, and so will likely apply in Hong Kong for a dual primary listing, said two of the sources as well as a separate person with direct knowledge of the matter. As per Hong Kong's dual primary listing rules, firms are subject to full bourse requirements in Hong Kong and a second exchange, but are not bound by the two-year rule. Xpeng is also considering a third listing on Shanghai's STAR Market for new-economy firms, said two other sources.

"In the long run, it's helpful for consumer-focused companies like us to connect with domestic capital markets and domestic investors," Xpeng president Brian Gu said last week when asked about local listing plans. "This is the direction we should pay attention to." He declined to comment on any Hong Kong listing plan.

China's government has heavily promoted NEVs - such as battery-powered, plug-in petrol-electric hybrid and hydrogen fuel cell cars - to help reduce chronic air pollution, spurring interest from technology companies and investors alike.

Last month, Reuters reported telecommunications firm Huawei Technologies plans to market EVs as early as this year. China forecasts NEVs will make up 20 per cent of the country's annual auto sales by 2025 - up from around 5 per cent in 2020.

Domestic vehicle deliveries last year totalled 32,624 by Li Auto, 43,728 by Nio and 27,041 by Xpeng. That compared with 147,445 vehicles by Tesla, industry data showed. REUTERS