Nio, a China-based smart electric vehicle producer backed by corporates Baidu, Lenovo, JD.com and Tencent, set its pricing range at $6.25 to $8.25 yesterday and will raise up to $1.32bn in its initial public offering.
The company will issue 160 million American Depositary Shares (ADSs). Proceeds could increase to approximately $1.52bn if underwriters take up their over-allotment option for an additional 24 million ADSs in full and Nio would achieve a valuation of $8.5bn in that case.
Founded in 2014 as NextEV, Nio is developing electric cars that offer features such as autonomous driving. The company’s first mass-produced model, a seven-seater sports utility vehicle, began shipping in June, and a five-seater vehicle is expected by the end of the year.
Proceeds from the initial public offering will go towards R&D, sales and marketing activities, extended production capabilities and a boosted supply chain.
Nio has obtained $2bn in funding to date, according to media reports, including more than $1bn in a November 2017 round led by internet company Tencent, with commitments from Pine Capital, Citic Capital and Baillie Gifford.
In 2015, Nio secured $500m in a round that reportedly featured Tencent, Sequoia Capital, Joy Capital and Hillhouse Capital. Tencent had already taken part in a round of undisclosed size alongside e-commerce firm JD.com and Shunwei Capital earlier the same year.
Consumer electronics company Lenovo contributed to a funding round of undisclosed size in July 2016 alongside Singaporean government-owned investment firm Temasek, TPG and Hopu Investment Management.
Tencent and its peer Baidu then co-led a $87m round in March 2017, with participation from Lenovo, TPG, Hillhouse, IDG Capital and GIC, the sovereign wealth fund of Singapore.
Tencent currently owns a 15.2% stake in Nio, which will be diluted to 12.9% following the IPO. Hillhouse’s shareholding will be reduced from 7.5% to 6.4%.
Nio’s founders and directors hold a 22.3% stake between themselves through various holding entities and will see their shareholding drop to 18.8%.
Morgan Stanley, Goldman Sachs, JP Morgan Securities, Merrill Lynch, Pierce, Fenner & Smith, Deutsche Bank Securities, Citigroup Global Markets, Credit Suisse Securities (USA), UBS Securities and WR Securities are serving as underwriters for the proposed offering.