Electric automobile manufacturer NIO productively listed on the most important board of the HKEX by way of introduction with shares beginning investing on March 10. This is the to start with time a Chinese organization determined to return to household marketplaces by using a listing by way of introduction since the US-China trade tensions commenced.
NIO’s listing in Hong Kong follows two other Chinese EV manufacturers, Xpeng and Li Vehicle, which came back to the Hong Kong current market via dual principal listings previous calendar year.
Skadden advised NIO on Hong Kong and US law, although Han Kun Law Office environment and Maples Team recommended on PRC and Cayman Islands legislation, respectively.
Simpson Thacher acted as Hong Kong and US counsel for joint sponsors Morgan Stanley, Credit Suisse and CICC, although Commerce & Finance Regulation Workplaces acted as PRC counsel for the sponsors.
NIO switched techniques in the procedure prior to deciding to checklist in Hong Kong by way of introduction, Bloomberg described. The EV corporation originally used for a share offering in Hong Kong in March very last year, but was queried by HKEX about its composition, like a user rely on, which delayed NIO’s programs.
Nevertheless, tackling the problem also arrived with a rate. In accordance to the Hong Kong listing procedures, corporations listed by way of introduction are not permitted to challenge new shares or elevate resources inside 6 months. Only existing shares are authorized for investing.
NIO beforehand defined that it decided “to supply company investors with an different transaction place, mitigate geopolitical threats, and broaden the trader base … without having diluting the passions of current shareholders”.
Kong Xin, a Beijing-primarily based companion at Commerce & Finance Legislation Offices who co-led the staff on the deal, instructed China Organization Legislation Journal that even though listing by introduction could have an affect on the liquidity of the company’s shares for six months, it was acceptable for organizations that experienced been mentioned in other regions with no financing desire in the shorter phrase, but which hoped to develop to HKEX as a foreseeable future financing platform.
Kong described that US-listed Chinese shares have not too long ago been afflicted by many exterior factors ensuing in spectacular price fluctuations. “The valuation of Chinese stocks of the web and other industries has been regularly challenged. Listing by way of introduction on the inventory exchange will assistance in revaluating Chinese concept stocks rationally,” he reported.
NIO stated on the listing documents that it experienced also applied for a secondary listing by way of introduction on the key board of the SGX-ST. Its software is at the moment under assessment.
NIO will not be the very last homecoming listing by way of introduction. The heightened regulatory ecosystem in equally China and the US is looking at a lot more US-listed Chinese organizations seeking for a way to return.
Way-of-introduction has become an different route for businesses this kind of as the experience-hailing system Didi. Soon after it was requested to delist in the US by Chinese regulators, it sought to list in Hong Kong by way of introduction. An additional example is Tencent Music Leisure, a subsidiary of tech giant Tencent, which declared at the conclude of March its secondary listing system in Hong Kong by way of introduction.
With two funds markets associated in the Chinese stocks’ homecoming, two sets of restrictions occur into thought. In check out of NIO’s Hong Kong listing, Kong emphasised that “it is required to spend interest to the dissimilarities in regulatory methods concerning US and Hong Kong cash marketplaces. This is particularly essential for the firms, as they want to judge and weigh the diverse specifications of the two exchanges and the China Securities Regulatory Fee in excess of the defense of small shareholders, with the aid from many skilled institutions.”