Tesla rival Xpeng enjoys a slight rise on its IPO price despite declining market in Hong Kong
(AF) Shares in Xpeng, the Chinese electric vehicle maker and a challenger to Tesla, opened at HK$168 (US$21.64) on Wednesday, which was 1.8% above the HK$165 price set on its initial public offering in Hong Kong. This was despite a 1.1% decline in the Hang Seng Index.
The dual primary listing is expected to raise HK$14 billion – US$1.8 billion – for the company, which wants to expand its product line-up and develop its technology.
The Guangzhou-based company, which is already listed on the Nasdaq, sold 85 million shares, which equates to 5% of its stock, according to its prospectus. There is an over-allotment option to sell a further 12.75 million shares that would raise an extra US$270 million.
The IPO comes as Chinese companies face pressure to list closer to home, and shortly after ride-hailing giant Didi Chuxing attracted scrutiny over data security when it listed abroad.
“Companies have to split their business,” Ferdinand Dudenhöffer, head of the Center Automotive Research in Germany. Didi’s fate shows how important the protection of Chinese customer data is, he told AFP.
Two other US-listed Chinese electric car makers – Nio and Li Auto – are also reportedly aiming to list in Hong Kong.
Xpeng, led by chief executive He Xiaopeng, will use the funds to develop more advanced “smart car” technologies, such as autonomous driving functions, with its in-house team of engineers, and will expand its product portfolio. It also has plans for two new car plants in China.
The company sells mainly in China, the world’s biggest car market, where it competes with Tesla and Nio.
Xpeng‘s New York American Depository Receipts (ADR) closed at $44.32 on Tuesday, down nearly 1%. One ADR is the equivalent of two ordinary shares in Hong Kong, a term sheet for the deal shows.
The stock has doubled since its August 2020 debut but is well down from its November peak of $64.28.
Xpeng chose a dual primary listing rather than a secondary listing as it has been listed in New York for less than two years. Under Hong Kong rules, a secondary listing requires at least two financial years of good regulatory compliance on another qualifying exchange.
The dual primary listing allows qualified Chinese investors to take part through the Stock Connect regime linking mainland Chinese and Hong Kong markets, according to the exchange’s rules.
With reporting by Reuters and AFP
ALSO SEE:
XPeng narrows loss but joins Nio in suffering from Tesla share slump
