Homebound? Chinese EV Makers Nio, Xpeng, Li Auto Mull Listings In Hong Kong: Reuters

U.S.-listed Chinese EV manufacturers could make a beeline to the Hong Kong stock exchange, following in the footsteps of the likes of Alibaba Group Holding Limited BABA and JD.com, Inc. JD.

What Happened: NYSE-listed Nio Inc – ADR NIO and XPeng Inc – ADR XPEV, and Nasdaq-listed Li Auto Inc. LI are eyeing secondary listings in the Hong Kong stock exchange, Reuters reported early Tuesday, citing people familiar with the matter.

See also: How to Buy Nio Stock

The three companies are seeking to offload a minimum of 5% of their increased share capital in Hong Kong, with the combined proceeds from the offerings estimated at around $5 billion, the report said.

The trio has already set in motion talks with advisors regarding the listings, it added.

The speculated move reportedly aims at capitalizing on the increased interest among Asian investors for quality, trusted names. The listings could happen as early as the middle of 2020, the report said.

The spokespersons for Nio and Xpeng declined to comment on the report when contacted by Benzinga.

Related Link: Is The Nio Sell-Off Overdone?

Why It's Important: EV manufacturers are operating in an investment-intensive industry that necessitates huge cash reserves to expand their product and service offerings and pursue innovation to stay relevant in the industry.

Nio, Xpeng and Li Auto had all raised massive amounts of capital through follow-on offerings in December. Nio raised $2.6 billion by offering 68 million ADSs, XPeng mobilized about $2.5 billion and Li Auto about $1.4 billion.

Aside of equity offerings, Nio has relied on debt offerings and strategic investments by investors in the past to raise cash.

In mid-January, XPeng announced a 12.8-billion-yuan ($1.96 billion) credit facility with a consortium of Chinese banks.

Alibaba set the ball rolling in this direction when it opted for a secondary listing in Hong Kong in late 2019. Apprehensions over access to capital from the U.S. market amid the deteriorating relationship between China and the U.S. and the quest to tap into the growing investor interest in Asia are serving as driving factors.

Incidentally, Chinese search engine Baidu, Inc. BIDU has reportedly received regulatory approval to begin proceedings toward Hong Kong listing.

Shares of Nio, XPeng and Li Auto have all taken a severe beating in recent sessions and are trading off their record highs amid the tech and related-sector sell-off and worries concerning valuations.

Nio closed Monday's session down 7.61% to $35.21, XPeng slipped 3.96% to $26.92 and Li Auto plunged 5.03% to $21.33.

Related Link: XPeng Beats Q4 Revenues, Guides For Strong Q1 Deliveries