INSUBCONTINENT EXCLUSIVE:
IPO window may be wide open for Chinese tech firms, but electric vehicle maker Nio has conservatively cut the target for its NYSE listing to
$1.5 billion after it released a price range for its shares.
The company plans to sell 184 million shares between $6.25-$8.25
That range would yield a total raise of$1.518 billion, which is down from the initial target of $1.8 billion from the firm first filing in
The range is, of course, subject to change and it doesn&t include income from the green shoe option — which allows underwriters to take an
additional allocation of shares — but nevertheless, it is a notable development.
Nio also revealed in its newest filing that its existing
investors have committed to investing $250 million into the IPO which, at the middle of the range, would account for 22 percent of the
allocation.
There are plenty of possible explanation as to why Nio has cut its overall fundraise estimate.
The most fundamental may be
The company has only just begun to generate revenue
Itopened sales for its ES8 vehicle last yearbut it only began shipping in June
So, thus far, it has fulfilled just481 orders but it does claims that there are17,000 customers who reserved a model and are waiting in the
wings to purchase it.
That meant that the company has recorded hefty losses — a negative $759 million in 2017 and minus $503 million this
year to date — as it went pedal to the metal on RD and preparation
Just a month of revenue makes it hard to gauge that potential, even though Nio has plans to scale up and open its own manufacturing
plants.
Also, however, it may also be related to general concerns around China.
Nio is an international firm which develops technology in
Silicon Valley and has design teams in Germany and the UK, but China is the only market it is focused on for sales
That makes a lot of sense since China is the world largest market for consumer EV sales, but there is,of course, a disconnect between the
While Chinese firms have performed well on U.S
public markets — Alibaba holds the record for the world largest IPO and the window is very much open for Chinese tech companies right now
— but EVs still remain a new concept, even in the world of technology.
Then there also the ongoing issue of politics
In particular, there President Trump continued trade war with China — the U.S
doubled down with a range of new tariffs last week — and some concern around Beijing interference withChina top technology
companies.
Tencent, the $500 billion giant, had a rare earnings miss last quarter on account of government interference in some of its core
business, while arch-rivalAlibaba has taken criticism about the way it dressed up its latest financials,which were good on paper
Indeed, both companies — which are China top tech firms — have seen their share prices drop: Alibaba current price is down by 15 percent
from what it was on January 1, while Tencent is down by 25 percent.
All those concerns gathered together have likely caused Nio to price
more conservatively, but we&ll have to wait for the list price to know for sure
Still, we&re looking at a billion-dollar IPO for the company which is seen by many as the closest competitor to Tesla — even if it
sale plans.
You can read more about the Nio business from our original story on the IPO filing below.
Chinese Tesla rival Nio files to
raise $1.8 billion in US IPO
