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China passenger drone maker targets $46m funding in US

EHang aims to list on Nasdaq with Morgan Stanley, Tiger Brokers among underwriting

Chinese drone maker EHang's two-seater EHang 216 autonomous aerial vehicle is readied for a test flight in Yantai, Shandong province, in April 2019.    © Reuters

HONG KONG -- Chinese drone maker EHang Holdings has set terms for an initial public offering on the Nasdaq Global Market with a target of raising up to $46.4 million.

EHang, which initially revealed its listing plan on Oct. 31, will offer 3.2 million American depositary shares at a price range of $12.5 to $14.5, according to an updated prospectus filed with the U.S. Securities and Exchange Commission on Dec. 5.

Morgan Stanley, Tiger Brokers, New York-based investment bank Needham & Company and boutique investment banking firm Prime Number Capital are the underwriters for the deal. They have been granted the right to purchase up to an additional 480,000 ADS to cover over-allotments in the IPO price, the prospectus shows.

Principal shareholders Hu Huazhi, co-founder, director and CEO of EHang, and Ballman, which is wholly-owned by EHang co-founder Hsiao Shang-Wen, have indicated their interest in buying a respective amount of up to $5 million and $2 million-worth of the shares being offered in the IPO.

EHang, founded in 2014 and based in the southern Chinese city of Guangzhou, operates as an autonomous aerial vehicle technology platform for the development, manufacture and sale of passenger drones and their supporting systems and infrastructure. It offers passenger transportation, logistics, smart city management and aerial media solutions for recreational and commercial use in China and worldwide.

The Chinese drone maker delivered its first passenger-grade AAV to a customer in March 2018. The company has so far delivered 38 passenger-grade AAVs for testing, training and development purposes, developed two command-and-control centers for smart city management and, as of Dec. 5, had unfilled purchase orders for 48 passenger-grade AAVs.

Hu is currently the largest shareholder with a 45.6 per cent stake. GGV Capital, a Chinese venture capital firm investing across Asia and the U.S., has the second biggest stake at 10.8 per cent, while Sequoia Capital-backed Chinese seed fund ZhenFund has 7.6 per cent. Ballman has 7.1 per cent.

They will remain the principal shareholders after EHang floats on Nasdaq. Hu, through his wholly-owned company Genesis Rising, will hold a 42.8 per cent stake in EHang with the right to exercise 88.2 per cent of the total voting power.

According to the prospectus, after the listing GGV Capital will keep 10.2 per cent of the shares, ZhenFund will have 7.1 per cent and Ballman 6.7 per cent.

EHang plans to list on Nasdaq under the symbol "EH."

DealStreetAsia is a financial news site based in Singapore focused on corporate investment activity in Southeast Asia and India. Nikkei recently acquired a majority stake in the company.

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