XPeng Inc. last week announced the launch of its initial public offering on the Hong Kong Stock Exchange. The Guangzhou, China-based automotive company is offering 85 million Class A ordinary shares in its global offering, and it could raise up to $2 billion (U.S.).
XPeng said it designs, manufactures, and markets electric vehicles (EVs) to appeal to the large and growing base of middle-class consumers in China. The company is also developing full-stack autonomous driving technology and an in-car intelligent operating system, as well as core vehicle systems including powertrain and the electrification/electronic architecture.
Also known as Xiaopeng Motors, the company was founded in 2014 and has offices in Beijing, Shanghai, Silicon Valley, and San Diego. Its smart EVs are manufactured in Zhaoqing and Zhengzhou, China. Xpeng said it delivered 5,686 vehicles in May 2021, a 481% year-over-year increase.
Xpeng develops autonomous, driver-assist features
In March, Xpeng claimed to have completed 3,000 km (1,864 mi.) in autonomous driving on Chinese highways with 0.71 human driver interventions per 100 km (62.1 mi.) using its XPILOT system. In comparison, Waymo LLC reported a rate of 0.033 disengagements per 1,000 mi. (1,609 km) in 2019.
Earlier this month, Xpeng released Xmart OS 2.6.0 through an over-the-air upgrade to P7 sports sedan customers in China. It included a beta version of its Valet Parking Assistant (VPA) and 10 additional autonomous driving and voice-assistance features.
VPA is designed for ultraslow-speed scenarios such as garages and parking spaces, and it can perform memory-based automatic parking on the same level within 1,000 m (3,280 ft.) from a memorized parking space while avoiding obstacles. The system can recall up to 100 parking spaces and does not require additional sensors, said Xpeng.
The company “is looking into making its own semiconductors for autonomous driving to stay ahead of the competition,” reported CNBC. Xpeng has been using NVIDIA Corp.'s DRIVE AGX platform, which includes the Xavier system-on-a-chip architecture. NVIDIA this month announced its intent to acquire autonomous vehicle mapping startup DeepMap.
Billion-dollar race for AVs
Xpeng, whose investors include Alibaba, raised $900 million in Series C+ financing in August 2020. The company raised $1.5 billion in its IPO on the New York Stock Exchange (NYSE), and The Wall Street Journal said the company has a market value of about $32 billion.
Several of this year's top transactions in robotics and related technologies have been around autonomous vehicles (AVs), including Plus merging with a special-purpose acquisition company (SPAC) for a $3.3 billion valuation, Cruise's $2 billion investment from Microsoft and $750 million from Walmart and others, and Waymo's $2.5 billion funding.
Other notable deals included TuSimple's $1.1 billion IPO, Woven Planet's acquisition of Lyft's Level 5 division for $550 million, Momenta's $500 million fundraising, and DiDi Autonomous Driving's $300 million round.
Xpeng said it plans to plans to use the net proceeds from its global offering to expand its product portfolio and develop more advanced technologies. It also intends to accelerate its business expansion by enhancing brand recognition, acquiring customers through omni-channel marketing strategies, and expanding its sales and service touch points both domestically and internationally.
In addition, Xpeng said it will expand production capacity, upgrade facilities, and development manufacturing technologies. Some of the funding will go to general corporate purposes, including working capital needs.
Offering details
Xpeng noted that its American depositary shares (ADSs), each representing two Class A ordinary shares, will continue to be listed and traded on the NYSE. The proposed listing is a dual-primary listing of the Class A ordinary shares of the company on the Hong Kong Stock Exchange. Investors in the global offering will only be able to purchase Class A ordinary shares and will not be able to take delivery of ADSs. Upon the proposed listing, the Class A ordinary shares listed on the Hong Kong Stock Exchange will be convertible with the ADSs listed on the NYSE.
The global offering initially includes 4,250,000 new Class A ordinary shares under the Hong Kong public offering and 80,750,000 new Class A ordinary shares for the international offering, representing approximately 5% and 95%, respectively, of the total number of offer shares in the global offering, subject to reallocation and over-allotment.
Subject to the level of oversubscription in the Hong Kong public offering and pursuant to the clawback mechanism as described in the Hong Kong prospectus, the total number of offer shares available under the Hong Kong public offering could be adjusted to up to a maximum of 17,000,000 new Class A ordinary shares, representing 20% of the shares initially available under the global offering.
In addition, Xpeng said it expects to grant international underwriters an over-allotment option to require it to issue up to an additional 12,750,000 new Class A ordinary shares in the international offering, representing no more than 15% of the total number of shares initially available under the global offering.
The maximum offer price for the Hong Kong IPO will be not more than HK$180.00 per share. The offer price for the international offering tranche of the global offering may be set higher. Xpeng plans to set the international offer price on or about June 30, Hong Kong time, by taking into consideration, among other factors, the closing price of the ADSs on the NYSE on the last trading day on or before June 30, and investor demand during the marketing process. The final Hong Kong offer price will be set at the lower of the final international offer price and the maximum offer price of HK$180.00 per share. The offer shares will be traded in board lots of 100 Class A ordinary shares.
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