HONG KONG (Reuters) – On Wednesday (July 7), shares in electric carmaker XPeng launched in Hong Kong, as Chinese-based companies trading in the US sought to evade the scrutiny of Beijing’s regulators by listing closer to home. XPeng, which is already listed on Nasdaq and is pursuing Tesla in China, is the latest Chinese company to IPO on the Hong Kong stock exchange, following the likes of video platform Bilibili and search behemoth Baidu.
The Guangzhou-based automaker sold 85 million shares at HK$165 (US$21.20) each in an initial public offering ahead of the commencement of trading in Hong Kong on Wednesday, raising HK$14 billion (US$1.8 billion).
On opening, its shares were trading roughly 1.8 percent higher.
The IPO comes as Chinese firms are under pressure to list closer to home, and just months after Didi Chuxing, the world’s largest ride-hailing company, was slammed for data security concerns when it went public abroad.
READ: China tightens oversight of foreign-listed companies in the wake of the Didi IPO fiasco
“Companies must split their businesses,” said Ferdinand Dudenhoffer, director of the German Center for Automotive Research.
He went on to say that Didi’s situation demonstrates the importance of protecting Chinese client data.
According to Bloomberg News, two more US-listed Chinese electric car companies, Nio and Li Auto, are planning to list in Hong Kong.
China is the world’s largest car market, with Beijing projecting that new energy cars will account for 25% of all vehicle sales by 2025.
Since co-founder He Xiaopeng proposed a combination with another failing electric manufacturer, Nio, XPeng has come a long way.
Nio’s creator, William Li, reportedly turned him down, according to Chinese media sources.
Last year, XPeng raised US$1.5 billion in its initial public offering in the United States. The Tesla-rival supplied over 27,000 vehicles in fiscal year 2020. If XPeng does successfully in Hong Kong, it might pave the path for other electric car businesses to make similar pivots. According to the prospectus, the funds will be used to increase the company’s product portfolio, technology development, and expansion. One of the vehicles in the company’s pipeline is an SUV with an autonomous driving system that will be released next year, aimed at China’s “increasing pool of technology-savvy middle-class consumers.” However, despite increasing revenues from 9.7 million yuan in 2018 to 5.8 billion yuan (US$900 million) in 2020, the company has yet to break even. Some analysts are still optimistic. “XPeng is in the forefront (of autonomous driving) in China, and the gap between it and Tesla is closing,” said David Zhang, a researcher at North China University of Technology./n
