EV Maker Xpeng Seeks $1.97 Billion in Hong Kong Listing

(Bloomberg) — New York-traded electric-vehicle maker Xpeng Inc. is looking to raise as much as $1.97 billion from 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 offering 85 million shares at a maximum price of HK$180 ($23.18) 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% over Wednesday’s closing price of $41.61 for Xpeng’s American depositary receipts (ADRs). 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.

Guangzhou-based Xpeng joins a parade of U.S.-traded Chinese businesses raising funds and establishing trading footholds in Hong Kong. Doing so provides a hedge against the risk of being kicked off American exchanges while broadening investor bases closer to home. Chinese enterprises have raised $37.5 billion through such listings since an Alibaba Group Holding Ltd. offering in 2019.

Xpeng went public in New York via a $1.72 billion initial public offering in August. The company 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 2020 rally, electric car-makers’ shares lost ground 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 with 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.

Contact editor Bob Simison (bobsimison@caixin.com)

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