Chinese EV maker NIO plans “listing by way of introduction” in Hong Kong on March 10

February 28, 2022 0 Comments

US-listed Chinese electric vehicle maker NIO announced on Monday that it had received an approval in principle from the Hong Kong stock exchange (HKEX) for its application to list by way of introduction.

If the listing goes as planned, its shares will be listed on the main board in Hong Kong on March 10, under the stock code “9866”, according to a filing with the HKEX.

Unlike other US-listed Chinese companies seeking secondary listings outside New York, NIO plans to list in Hong Kong by way of introduction, which means it will not sell new shares or raise new capital.

NIO said in the filing that it started generating a positive cash flow in 2020 and the nine months of 2021. Morgan Stanley, Credit Suisse, and CICC are the joint sponsors of the deal.

The Shanghai-based EV company also said that it has applied for a “way of introduction” listing on the Singapore Stock Exchange’s main board, but there are no plans to make the Singapore and Hong Kong-listed shares exchangeable.

Listing by introduction is a way of listing shares already in issue on another exchange. Even marketing arrangements by underwriters are not required, as the shares for which listing is sought are already widely held. It is a more expedited route for US-listed Chinese firms to pursue a Hong Kong listing.

In March last year, NIO applied for a secondary listing in Hong Kong but was rejected by the Hong Kong Stock Exchange (HKEX) due to its User Trust holdings.

NIO User Trust was set up in January 2019 by NIO with the goal of building a deeper connection between the company and its users. William Li, founder and CEO of NIO, transferred an aggregate amount of 50 million ordinary shares to the trust. Li retains the voting rights of the transferred shares, and NIO users have been given the opportunity to discuss and propose the use of the economic benefits from the transferred shares.

NIO’s two major rivals in China, Xpeng Motors and Li Auto, have both been listed in the city, raising more than HK$10 billion each.

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