Tencent-backed EV maker seeks valuation above $8 billion in IPO

Bloomberg

NIO Inc., the Chinese electric-car maker backed by Tencent Holdings Ltd., is planning a US initial public offering that would give it a valuation topping $8 billion as it gears up to take on the likes of Tesla Inc.
The company is aiming to raise as much as $1.3 billion, offering 160 million American depositary shares at $6.25 to $8.25 each, according to a regulatory filing in the US. That would give the company a market capitalisation of about $6.4 billion to $8.5 billion.
NIO is among Chinese electric-car companies raising money to fund aggressive product development and expansion amid the auto industry’s seismic shift towards alternative-power and autonomous vehicles.
China’s government is also pushing to increase the use of battery-powered cars to cut pollution and reduce dependence on imported oil, spawning a clutch of startups in the nation aiming to take on Tesla and legacy carmakers.
NIO plans to use proceeds from the offering for research and development, sales and marketing, and building manufacturing facilities and the supply chain, the company said in the filing.
Shares are expected to price on September 11 following a roadshow that starts in Hong Kong, according to terms for the deal obtained by Bloomberg.
Concentrated Power
The offering has been structured to ensure voting rights remain concentrated with founder William Li and technology company Tencent. After the IPO, Li will own 14.5 percent of the electric-car maker and have 48.3 percent of the voting power through Class C shares. The Class B stock owned by Tencent and related entities after the offering will represent 12.9 percent of NIO and 21.5 percent of the voting power, according to the prospectus.
As much as 5 percent of the ADS, each representing one Class A share, has been reserved for directors, officers, employees and other individuals associated with company, it said. Including an overallotment option, the IPO could raise as much as $1.5 billion.
After meeting investors in Hong Kong on Wednesday and Thursday, the NIO management will be in Singapore on Friday, according to the deal terms. The roadshow will continue in London and the US.