Chinese auto maker Li Auto raised $1.1 billion in an IPO on Nasdaq

1 Aug, 2020 00:55
source: Singularity Financial

Singularity Financial Hong Kong July 31, 2020 – Chinese auto maker Li Auto raised $1.1 billion in an IPO on Nasdaq on Thursday, valuing the five-year-old electric vehicle maker at around $10 billion. The timing of the Chinese EV IPO streak comes at a time when Washington is less welcoming of Chinese stocks than Wall Street is.

Li Auto, alternatively known as Lixiang, was founded in 2015 by its CEO and chairman Li Xiang, for whom it’s named. The company is backed by China’s largest consumer services app, Meituan, as well as Beijing Bytedance, which owns short-video app TikTok.

Unlike most other electric vehicle makers, Li Auto specializes in so-called extended range electric vehicles (EREVs), which can be powered by either electricity or gasoline. The hybrid engine compensates for China’s sparse EV-charging infrastructure, Li Auto says, and serves as a better gateway for weaning consumers off of petrol-powered cars. Since shipping its first model in late 2019, the company has sold around 10,000 units.

Li Auto’s shares surged 43% on its first day of trading.

Another Chinese electric automaker, Xpeng, is reportedly also planning for a U.S. IPO this year.

In its filing with the SEC, Li Auto admits that the SEC currently isn’t able to inspect the company’s audits and warns that, should the Senate bill turn into law, they could be required to delist.

But the Peterson Institute for International Economics, a U.S. think tank, points out that delisting Chinese companies from the U.S. won’t cut them off from U.S. capital.

If a Chinese company shifts from the U.S. market to another, existing shareholders will be given the option to swap for shares in the new listing. Alternatively, if the company is brought private, current shareholders will be bought out at a premium