Nearly five months after reports of a secondary listing by Nio, Inc. NIO initially broke out, not much is known as to how far the plan has progressed.
A report in local Chinese news outlet now suggests the company is facing issues with respect to its Hong Kong listing.
What Happened: Nio filed an application to the Hong Kong stock exchange in the third week of March but has not yet received clearance from the exchange CnEvPost reported, citing Tencent news.
The stalemate, according to the report, is due to user trust holdings of Nio. The report however did not clarify as to how it is impeding the listing process.
Nio established a Nio User Trust at the time of its IPO, and in January, the company's founder, Chairman and CEO William Li transferred 50 million ordinary shares, comprising 189,253 Class A shares and 49,810,747 Class C ordinary shares, to the trust.
At that time, the company said the establishment of the trust was to pursue its goal of being a user enterprise and build a deeper connection with its users.
At an extraordinary meeting of shareholders held in June, the company passed a resolution to allow the trust to take part in decision making. The trust was to be given the right to nominate directors to the board.
Related Link: How Much A $1,000 Nio Investment In 2019, When The EV Stock Was Emerging From Liquidity Crunch, Would Be Worth Today
The norms of the Hong Kong stock exchange, according to the report, allow listing in about three months following the filing of listing application. Since Nio is pursuing a secondary listing, the timeframe is even shorter.
The recent appointment of Chinese businesswoman Long Yu — who is currently serving as the founding and managing partner of BAI Capital — as an independent director, is reportedly seen as a step to expedite the listing process.
Why It's Important: Nio's quest for a secondary listing closer to home is predicated on the twin objectives of widening its investor base and acting as a hedge against potential delisting in the U.S. amid patchy relations between the U.S. and China.
Recently, local media reports have suggested that Nio might be seeking a third listing in China's A share market in the future.
Nio's domestic rival XPeng, Inc. XPEV pursued a dual primary listing and listed its shares on the Hong Kong stock exchange on July 7. XPeng's Hong Kong-listed shares closed the debut session flat with the IPO price at 165 Hong Kong dollars per share ($21.24). The stock has pulled back since then and lost about 8.5% despite being added to the Hang Seng Composite Index.
At last check Friday, Nio shares were down 1.92% at $42.84.
Related Link: Nio Begins Shipping Charging Infrastructure To Norway Ahead Of September Deadline For Commencing Operations of Power Unit
Photo: a Nio battery swap station.
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