EV Maker Xpeng Gets Nod for $2 Billion Hong Kong Listing

(Bloomberg) — New York-traded electric vehicle maker Xpeng Inc. won a green light for a share sale on the Hong Kong stock exchange, the latest homecoming flotation by a Chinese company.

The company submitted an updated listing document Wednesday indicating it received approval from the bourse. The filing didn’t specify Xpeng’s fundraising size. The EV maker could raise as much as $2 billion in Hong Kong as early as this year, according to people familiar with the matter who asked not to be identified as the information is private.

Xpeng’s American depositary receipts climbed 5.3% in premarket trading Wednesday.

A listing by Xpeng would end a brief hiatus in such share sales by U.S.-listed Chinese companies. Online travel company Trip.com Ltd. was the last, raising about $1.25 billion in April in Hong Kong. Many U.S.-traded Chinese companies have flocked to the Asian financial hub since it eased rules in 2018 to admit the likes of Alibaba Group Holding Ltd. and gaming giant NetEase Inc.

Aside from raising significant amounts of cash, share sales in Hong Kong give stateside-traded Chinese enterprises a hedge against the risk of being kicked off U.S. exchanges while allowing them to broaden their investor base closer to home. Under a law passed in the U.S., Chinese public companies could be expelled from U.S. bourses if American regulators aren’t allowed to review their audits.

Unlike the other homecoming listings, however, Xpeng’s isn’t a secondary listing — which would have exempted it from some of the Asian hub’s listing rules — but a dual primary listing. That is because Xpeng went public in New York only last year, so it doesn’t have the two-year listing track record required for a secondary listing in Hong Kong. It’s set to be the biggest dual primary listing in Hong Kong since biotech drugmaker BeiGene Ltd. raised $903 million almost three years ago.

After raising $1.72 billion in its August IPO in New York, the company fetched $2.5 billion more from investors by placing stock in December.

EV Stocks

Xpeng will be coming to a market that’s less enamored of EV makers. After a blistering rally in 2020, electric-car makers’ shares declined this year amid increasing competition from legacy automakers, the global semiconductor shortage and an increasing wariness by investors of holding riskier assets.

Xpeng’s stock surged 381% from its IPO price to a high of $72.17 in November, but it has since fallen about 44%, giving the Guangzhou-based company a market capitalization of around $32 billion.

The carmaker also faces intense competition at home. Rival Chinese EV companies Nio Inc. and Li Auto Inc. — both traded in the U.S. — are also planning listings in Hong Kong. The trio compete in an increasingly crowded market in China — the world’s largest for electric vehicles — as tech giants, traditional automakers and startups muscle into the sector.

Xpeng has yet to turn a profit and has pledged to break even by late 2023 or 2024. Its revenues have been increasing, however, rising to 2.95 billion yuan in the first quarter, and its deliveries grew 483% in May from a year earlier.

Contact editor Bob Simison (bobsimison@caixin.com)

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