eVTOL Developer EHang Sets IPO Price For Nasdaq Flotation

 - December 12, 2019, 10:10 AM
China's EHang is looking to raise fresh capital to finance the development of its two-seat 216 eVTOL aircraft.

Autonomous electric aircraft developer EHang Holdings is looking to raise $46 million from an initial public offering (IPO) due to begin trading today on the Nasdaq Global Market. The target is less than half the $100 million projected when the company filed its IPO declaration with the U.S. Securities and Exchange Commission on October 31.

EHang, trading under the symbol EH, is offering 3,200,000 American Depository Shares (ADSs) at $12.50 per share, which is at the lower end of the $12.50 to $14.50 anticipated in SEC filings made earlier this week. Underwriters also have a 30-day option to purchase a further 480,000 ADSs at the offer price.

According to a Nasdaq statement, existing investors are expected to pay a further $7 million for further shares through the IPO, which is due to close on December 16. At the IPO offer price, EHang has a fully diluted market capitalization of $687 million.

Derrick Xiong, co-founder and chief marketing officer, told AIN that funds raised through the IPO will support research and development work around completing type certification and airworthiness approval for EHang’s 216 autonomous aerial vehicle (AAV). In February 2020, it expects to complete a year-long program of pilot operations agreed with the Civil Aviation Administration of China (CAAC). Assuming the agency grants EHang a certificate confirming successful completion of these trials it expects to be able to begin the full airworthiness process that Xiong said would be the springboard to achieving reciprocal approval from U.S. and European authorities.

In the remaining weeks of 2019, EHang expects to add to the 38 deliveries of the 216 aircraft that it has already made to a number of undisclosed customers. Xiong described these as business-to-business transactions to companies that intend to operate the aircraft in a variety of roles and/or act as dealers selling them in their respective territories at a “suggested price” of around $300,000.

While not disclosing detailed projections for anticipated deliveries in 2020, Xiong indicated that production capacity could be ramped up to allow “double or triple” the rate of output. He said that EHang aims to start similar pilot operations in a number of other Chinese cities. Each of these requires approval from CAAC, Chinese air traffic management agency and city governments.

“The Nasdaq listing is important to us, not just for the money it has raised, but because, as a Chinese company, we want to be more global and more transparent to investors, customers and regulators,” Xiong commented.

At the end of its first day of Nasdaq trading, EHang's stock closed at $12.49.

Last week, EHang announced a partnership with Heli Chuangxin Real Estate Co. Ltd to jointly develop infrastructure to support urban air mobility operations in the Chinese city of Guangzhou. As part of a pilot program approved by Chinese authorities, the partners have identified sight-seeing flights as one of the early commercial applications for the two-seat EHang 216 autonomous aerial vehicle.

[This story was updated at 4.30 p.m. on Thursday, December 12]