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Tencent-backed electric car startup NIO applies for $1.8B US IPO

Chinese electric vehicle maker NIO Inc. has applied for a $1.8 billion IPO on the New York Stock Exchange, according to an Aug. 13 SEC filing.

The Shanghai-based startup intends to list its American depositary shares under the ticker symbol NIO. It has not yet specified the number of shares that will be offered.

NIO is known for producing the ES8 premium electric SUV, and is planning to launch the smaller, lower-priced ES6 model later this year. It was founded in 2014 and counts Chinese tech giant Tencent Holdings Ltd. and investment firm Hillhouse Capital Group Ltd. among its backers.

The company also develops autonomous driving technology, and works with Tencent and Chinese internet major Baidu Inc. on mapping and cloud services.

It recorded a net loss of $758.8 million in 2017 and a net loss of $502.6 million for the first half of 2018.

NIO plans to put proceeds from the IPO toward research and development, sales and marketing, and supporting the buildout of manufacturing facilities and a supply chain, in addition to general corporate purposes and working capital. The company estimates that it needs to spend about $650 million on improvements and installation of equipment at its Shanghai factory, half of which is expected to be financed by the IPO.

In addition, NIO founder, Chairman and CEO Bin Li said in the SEC filing that he plans to transfer 50 million shares, or about one-third of his shareholding in the company, to a trust "at an appropriate time in the future."

He said: "While I will retain the voting rights of the shares to be transferred to the trust, I will let NIO users discuss and propose how to use the economic benefits from these shares, through certain mechanisms to be implemented in the future."

Morgan Stanley, Goldman Sachs (Asia) LLC and J.P. Morgan are leading the IPO, with Bank of America Merrill Lynch, Citigroup, Deutsche Bank, Credit Suisse, UBS Investment Bank also acting as underwriters for the offering.