On August 27th, NIO announced that they plan to issue 75 million American Depositary Shares (ADS), with each ADS representing one Class A ordinary share. NIO intends to grant the underwriters an option to purchase up to an additional 11.25 million ADS within 30 days.
Morgan Stanley, CICC, and Bank of America Securities are the underwriters for this share issuance.
According to NIO’s prospectus, the net proceeds of the issuance are expected to be approximately USD 1.4974 billion based on a calculation of USD 0.00025 per share. Assuming the underwriters exercise their option to purchase additional ADS, the net proceeds would be approximately USD 1.7222 billion.
The prospectus also shows that the net proceeds from this issuance will be used for three main purposes:
1. Increase the equity interests of NIO China and our ownership. Further develop NIO China’s new products and technologies, expand sales and service network；
2. Purchase equity interests in NIO China from certain minority shareholders as a value-added service to our investors and increase our equity interests in NIO China;
3. Use the remaining net proceeds for the research and development of autonomous driving technologies, global market development and the general corporate purposes.
Overall, NIO aims to buy back equity interests to protect investors’ interests, expand and improve the sales network, and increase investment in autonomous driving technology. With XPeng recently going public, NIO’s move to accelerate its development appears to be aimed at distancing itself from its competitors.
This article is a translation by ChatGPT of a Chinese report from 42HOW. If you have any questions about it, please email bd@42how.com.