Xpeng , a Chinese electric vehicle (EV) manufacturer listed in the New York Stock Exchange (NYSE), aims to raise up to USD2.3bn (HKD17.6bn) in a secondary IPO in Hong Kong, as reported by South China Morning Post on June 25. On June 23, the listing committee of Hong Kong Exchanges and Clearing Limited (HKEX) permitted Xpeng’s IPO through a dual primary listing process, after which the EV manufacturer’s American depositary shares (ADSs) in NYSE rose 4%. The company is selling 85m new shares, with 4.25m currently reserved for the retail portion and the rest open to global investors. The price of the retail portion is up to USD23.2 (HKD180) per share, with a 11.7% premium above its ADSs. JP Morgan Chase and BofA Securities serve as the co-sponsors of the EV maker’s IPO, according to its HKEX filing. Xpeng will be listed on the HKEX on July 7.

Xpeng’s secondary IPO can raise the capital for research and development to sustain the company’s growth within China’s burgeoning EV market. In 2020, the carmaker’s sales revenue increased 155.5% YoY to RMB5.55bn. With the growth of revenue, its gross profit ratio also increased significantly from -24.0% in 2019 to 4.6% in 2020, and then to 11.2% in 1Q21. By the end of May, the total number of Xpeng vehicles delivered this year reached 24,173 units, an increase of over 500% compared with the same period in 2020.

The IPO also heralds Hong Kong as the world’s preferred IPO destination, a title the city has held in seven out of the previous 12 years until recently taken over by Nasdaq. As of March 29, the HKEX Main Board raised about USD17bn for 29 new listings this year, shy of Nasdaq’s nearly USD25bn with 81 new listings. As Hong Kong strives to recover from a recession caused by the COVID-19 pandemic, HKEX relaxed its listing requirements to welcome secondary and dual listings on the exchange and to further embrace overseas investments. In addition to Xpeng, many other Chinese tech giants have benefited from HKEX’s relaxed policies. The four biggest secondary listings globally in 1Q21 were all on the HKEX Main Board, three of which were US-listed Chinese tech companies, including Baidu , Bilibili , and Autohome .

Sources:

https://www.scmp.com/business/article/3138645/xpeng-sets-hong-kong-ipo-price-cap-en-route-citys-fifth-largest-listing

https://www.scmp.com/business/banking-finance/article/3138423/xpeng-gets-green-light-hong-kong-ipo-extending-citys-dual

https://www.163.com/dy/article/GD8L0J4I0519VPHD.html

https://baijiahao.baidu.com/s?id=1703248913338228178&wfr=spider&for=pc

https://www.charltonslaw.com/hkex-proposes-extension-of-its-secondary-and-dual-primary-listing-regimes/

https://www.pwc.com/gx/en/audit-services/ipo-centre/assets/pwc-global-ipo-watch-q1-2021.pdf