US-listed Chinese electric carmaker Xpeng has opened a Hong Kong share sale for subscription last Thursday (June 24), with the aim of raising up to US$2 billion (RM8.3 billion). The primary dual listing of 85 million shares will be open until Tuesday (June 29) and is scheduled to price the following day, according to a Nikkei Asia report.

It adds that the maximum share price for retail investors is 180 Hong Kong dollars (US$23, or RM95.50), representing a 11.7% premium compared to its Wednesday (June 23) closing price on the New York Stock Exchange (NYSE). However, companies typically price their Hong Kong share offerings lower than their US trading price, the report adds. Two Hong Kong shares is equal to one American depositary receipt.

This IPO is the latest “homecoming listing” where US-listed China companies list closer to home as a way to hedge against a forced delisting in the US. Under a new law enacted last year, Chinese companies are at risk of being delisted on the US stock exchange by 2023 if their audit records are not provided to US regulators for review. Beijing forbids such reviews on national security grounds.

Among other US-traded companies that are listed on the Hong Kong exchange include Alibaba Group Holding and online retailer JD.com, though it has been reported that Nio and Li Auto (both are listed on the US stock exchange) are also working on Hong Kong share sales.

Xpeng, which has yet to make a profit, has been raising funds to remain competitive in an increasingly crowded market. Last August, it raised US$1.72 billion (RM7.14 billion) from an IPO on the NYSE, then sold more shares in December to raise US$2.5 billion (RM10.38 billion). The company’s shares have surged 180% since the IPO, and it is currently valued by the market at US$32 billion (around RM133 billion).

Xpeng has the option to sell another 12.75 million shares as part of an overallotment option, boosting the offering size to as much as US$2.27 billion (RM9.43 billion). It plans to use 45% of the proceeds to develop more technologies and introduce more cars, 35% for business expansion, 10% to enhance production capacity, and the remainder for corporate purposes, according to a term sheet seen by the publication. It plans to breakeven by late 2023 or 2024.

In the first quarter of 2021, Xpeng delivered 13,340 cars to customers. This is a marked increase over the 2,271 vehicles it sold in the same period last year. Revenue in the same period surged more than seven fold to US$450.4 million (RM1.87 billion) according to its prospectus. Xpeng, which currently offers the G3 SUV, P5 and P7 fastback sedans, plans to continue ramping up deliveries.