Li Auto plans to raise up to $1.93bn from Hong Kong listing

Chinese electric vehicle start-up Li Auto announced its plans to raise about $1.93bn in a Hong Kong secondary listing.

The firm reported it will offer 100 million class A ordinary shares to investors. Notably, the price will be no more than 150 Hong Kong dollars or $19.29. However, final pricing is due on August 6.

Remarkably, at 150 Hong Kong dollars per share, the company would raise 15 billion Hong Kong dollars or $1.93 billion.

The Nasdaq-listed firm is pushing ahead with the listing despite a recent sell-off in Chinese technology stocks. As we know, a recent sell-off was triggered by regulatory crackdowns affecting everything from food delivery to ride-hailing.

Notably, China-based electric vehicle makers are striving to take advantage of the excitement around the industry to raise money.

Earlier in July, the company’s competitor Xpeng raised about $1.8 billion in a Hong Kong listing.

However, electric vehicle start-up is also tapping into a trend of U.S.-listed Chinese firms aiming to raise money closer to home. NetEase, Alibaba, and JD.com are among China’s technology titans that have carried out secondary listings.

Li Auto plans to use the proceeds of its share offering for R&D into technologies and future models

It’s essential to note that doing a secondary listing in Hong Kong also helps to hedge against some of the geopolitical risks.

As we know, earlier in 2021, the SEC adopted rules that impose stricter auditing requirements for foreign companies listed in the U.S. Remarkably, these requirements carry the threat of delisting for firms that run afoul of the rules.

Earlier in July, the U.S. Securities and Exchange Commission, also announced it will require additional disclosures from Chinese firms looking to list on U.S. exchanges.

According to Li Auto, the firm plans to use the proceeds of its share offering for R&D into technologies and future models and expand production capacity and its retail store footprint.

Rivalry in the Chinese electric vehicle market is becoming intense. Start-up companies such as Li Auto, Nio and Xpeng compete against giant players like Tesla and BYD and traditional automakers.

On Sunday, Li Auto announced it delivered 8,589 Li One vehicles in July, a monthly record. Notably, the Li One SUV is its only model on the market. It’s a hybrid car with a fuel tank for charging the battery. It is extending the 180-kilometer driving range by around 620 km.