The U.S.-traded company filed for a second listing in Hong Kong in March, but isn’t likely to debut in the Asian financial hub before early 2022, the people said, asking not to be identified as the information is private. Nio has received queries from the Hong Kong stock exchange about aspects of its structure, including a user trust set up in 2019, the people said.
Widely seen as one of Tesla Inc.’s closest competitors in China, Nio announced on Wednesday that it plans to sell as much as $2 billion in American depositary receipts. The U.S. share sale allows the firm to raise money quickly given the delay in the Hong Kong listing plan, a different person said.
Deliberations are ongoing and Nio could still decide not to proceed with a Hong Kong listing, the people said. Representatives for Nio and Hong Kong Exchanges & Clearing Ltd. declined to comment.
Nio shares fell as much as 3.5% in premarket trading following the Bloomberg News report. They have declined about 22% this year.
Attempting to become the first high-end EV player to come out of China, Nio calls itself a “user enterprise” — building a dedicated customer base with exclusive owners’ clubs and generating revenue from loyal fans with lifestyle products ranging from clothing to exercise equipment. In 2019, Chief Executive Officer William Li transferred 50 million company shares to a Nio User Trust to let customers “have the opportunity to discuss and propose the use of the economic benefits from the transferred shares,” according to a company filing. He retains voting rights over the shares.
Read More: Elon Musk’s China Nemesis Survived Once But He Has a Fight Ahead
That structure could now stand in the way of allowing Nio to follow rival U.S.-traded EV upstarts Xpeng, which raised $1.8 billion in July, and Li Auto, which raised $1.5 billion last month, in seeking a listing in Hong Kong.
Nio shares fell the most in almost three weeks in New York on Wednesday after the ADR sale was announced. The company debuted in the U.S. three years ago, long before China started applying greater scrutiny to offshore listings.
The capital raising may reflect “further delays in the Hong Kong listing process,” Deutsche Bank AG analyst Edison Yu wrote in a note Thursday.
Read More: Nio Eyes U.S. Stock Sale in Biggest China Offering Since Didi
Nio has so far released just one model per year and targets the premium end of China’s EV market, the largest in the world. It’s preparing to launch two new cars in 2022, as well as the already flagged ET7 sedan, and to expand into the mass market, which will require more capital.
It also plans to increase its research and development spending to 5 billion yuan ($774 million) this year.
(Updates with share price move in fifth paragraph.)
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