In the shadow of Tesla, the Chinese NIO raises $ 1 billion from IPOs – sources

NEW YORK / HONG KONG (Reuters) – Chinese start-up of electric vehicles NIO Inc. (NIO.N) The price of its shares was near the bottom of its target price range in its initial US public offering, according to sources familiar with the matter, driven by investor concerns over the prospects of chief competitor Tesla Inc. (TSLA.O).

Tesla's struggle to achieve its production goals and an unsuccessful attempt by CEO Elon Musk to take it privately weighed not only on his own actions, but also on those of his peers seeking to develop consumer electric cars.

Chinese automakers are seeking capital to develop autonomous driving technologies and batteries. Beijing wants to quickly expand Chinese production to reduce vehicle emissions, enhance energy security and promote high-tech industries.

According to four sources close to the process, NIO valued its shares at $ 6.26, just above the bottom of its target price range of $ 6.25 to $ 8.25. The deal will value the company at $ 6.41 billion (4.93 billion pounds). It should go public on Wednesday on the New York Stock Exchange under the symbol "NIO".

Earlier, a source told Reuters that the deal would cost $ 6.25 per share.

A representative of NIO did not immediately respond to a request for comment.

NIO, founded by Chinese entrepreneur William Li in 2014, sold $ 1 billion of shares as part of the IPO, making it the third largest US listed company this year.

At the beginning of the IPO process, NIO had hoped for a valuation of $ 20 billion, according to someone familiar with the company's projects.

The IPO comes as China-U.S. Trade tensions involving tariffs have depressed global stock markets.

NIO, supported by Chinese technology giant Tencent Holdings Ltd (0700.HK), plans to use the product of the IPO for research and development of products and technologies, marketing and development of manufacturing facilities.

Other funders include Hillhouse Capital Group investment companies, Sequoia Capital and a private equity fund established by Baidu Inc. (BIDU.O).

NIO incurred a net loss of $ 502.6 million in the first six months of 2018 on revenues of $ 6.95 million. In June, it began delivering its seven-passenger, all-electric SUV, ES8, which the company considers a competitor of Tesla's X model.

NIO indicated in its listing prospectus that by the end of August it had delivered approximately 1,600 ES8 and held another 15,778 reservations for the vehicle.

She also plans to launch a second SUV, the ES6, by the end of the year.

Electric car manufacturers such as WM Motor Technology Co and Xpeng Motors have also collected billions of dollars from leading investors such as Alibaba Group Holding Ltd (BABA.N), Baidu and Tencent.

Goldman Sachs, JPMorgan and Morgan Stanley led the IPO of NIO. Bank of America Merrill Lynch, Credit Suisse, Citigroup, Deutsche Bank and UBS were also involved.