© Reuters. An Xpeng P5 electric vehicle (EV) is seen displayed during a media day for the Auto Shanghai show in Shanghai, China April 19, 2021. REUTERS/Aly Song/Files

By Scott Murdoch

HONG KONG (Reuters) – Chinese electric vehicle maker Xpeng Inc will raise $1.8 billion by pricing its shares at HK$165 ($21.25) each as part of its Hong Kong dual primary listing, two people with direct knowledge of the matter said.

The people declined to be identified as the information was not yet public. Xpeng declined to comment on pricing guidance given to investors.

The company sold 85 million shares in the deal which equates to 5% of its shares, according to its prospectus. There is an over-allotment option to sell a further 12.75 million shares that would raise an extra $270 million.

Xpeng’s New York American Depository Receipts (ADR) closed Tuesday at $44.32, down nearly 1%. One ADR is the equivalent of two ordinary shares in Hong Kong, a term sheet for the deal shows.

The stock has doubled since its August 2020 debut but is well down from its November peak of $64.28.

Xpeng chose a dual primary listing rather than a secondary listing as it has been listed in New York for less than two years. Under Hong Kong rules, a secondary listing requires at least two financial years of good regulatory compliance on another qualifying exchange.

The dual primary listing allows qualified Chinese investors to invest in the company through the Stock Connect regime linking mainland Chinese and Hong Kong markets, according to the exchange’s rules.

Led by Chief Executive He Xiaopeng, Xpeng sells mainly in China, the world’s biggest car market, where it competes with Tesla (NASDAQ:) Inc and Nio (NYSE:) Inc.

A cap of HK$180 per share ($23.19) was put on the deal for retail shareholders as part of the listing.

($1 = 7.7625 Hong Kong dollars)

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