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China EV Maker Nio to List in Hong Kong; Won’t Raise Money

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(Bloomberg) — Chinese electric-car maker Nio Inc. will start trading on the Hong Kong stock exchange next week, choosing a path to listing that doesn’t involve selling new shares or raising any money.

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The Shanghai-based automaker has applied for a secondary listing of its Class A ordinary shares on the Hong Kong exchange by way of introduction, it said in a statement. Trading is expected to start March 10, subject to final approval from regulators.

The company initially filed for a Hong Kong listing in March 2021, but that was delayed amid regulatory concerns about aspects of its structure, Bloomberg News reported last year. In 2019, Chief Executive Officer William Li transferred 50 million company shares to a Nio User Trust, though he retained voting rights over the shares.

The move completes a homecoming of sorts by all three U.S.-traded Chinese EV manufacturers — Nio, Xpeng Inc. and Li Auto Inc. — after the latter pair listed on the Hong Kong exchange last year. A second listing in Hong Kong provides a hedge against the risk of being delisted from U.S. exchanges.

However, unlike its rivals, Nio chose to list by way of introduction — an easier way for a company already listed elsewhere to join the Hong Kong market. Nio won’t sell shares or raise new funding, so won’t incur additional listing expenses, according to the exchange’s website. Xpeng raised about $2 billion in its Hong Kong listing, while Li Auto raised around $1.7 billion.

With its Hong Kong listing delayed, Nio in September raised $2 billion in American depositary receipts.

Didi Global Inc., one of the highest-profile targets of a broad Beijing campaign to rein in the country’s giant tech sector, has been working with banks for a listing in Hong Kong that could be by way of introduction, people familiar with the matter told Bloomberg News last year. The arrangement requires little marketing and would allow U.S. investors to swap their shares for the new stock in Hong Kong.

Listing by way of introduction “is an alternative option” for U.S.-listed Chinese companies in an environment of regulatory uncertainty, said Bruce Pang, head of macro and strategy research at China Renaissance Securities Hong Kong Ltd.

Read more: China Unveils Sweeping Rules for Foreign IPOs in Didi’s Wake

To facilitate trading in Hong Kong, Tencent Holdings Ltd. — an early investor in the EV company — will lend 41.4 million Class A shares, or about 2.7% of the stock on issue, to designated dealers to make available to buyers.

Separately, Nio said it has also applied for a secondary listing by way of introduction on the Singapore stock exchange, and the application is under review.

Listing in Hong Kong and Singapore will widen Nio’s financing options, mitigate political risk and allow the company to connect more deeply with Asian investors, according to a Citigroup note.

Founded in 2014, Nio has recovered from a near-death experience to gain a solid foothold in China’s burgeoning EV market, delivering 91,429 cars in 2021. Its American depositary receipts will continue to be primarily listed and traded on the New York Stock Exchange.

Nio’s U.S.-traded shares have slumped 34% this year.

(Adds analyst comment in 8th paragraph.)

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