HONG KONG (Reuters) – Chinese electric vehicle (EV) maker NIO Inc has blocked the eight top investment banks that did its IPO from working for rivals by tying them up in rare year-long non-compete clauses, several people with direct knowledge of the matter said.
The move highlights the fierce competition between China’s EV makers as they seek the capital needed to survive in a fast-growing market, also the world’s largest.
NIO - Offering - September - Bank - America
NIO, for its initial public offering in September, had hired Bank of America Merrill Lynch, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan, Morgan Stanley and UBS.
These were also the top eight banks worldwide for equity sales in 2018, according to Refinitiv data.
Clause - Prevents - NIO - Rivals - Funds
The non-compete clause prevents them from helping NIO’s rivals raise public or private funds for 12 months following the IPO, the sources said, declining to be named as they were not authorized to speak publicly on the matter.
NIO and the banks declined to comment.
List - Rivals - Restrictions - Names - Agreements
The list of rivals covered by the restrictions included up to 10 names, although it may have varied between the individual agreements, the people said.
Xpeng Motors and WM Motor were on that list, three sources said. A separate source said the list included those two and Byton, among others.
NIO - Demands - Breadth - Duration - Sources
NIO’s non-compete demands were particularly restrictive both in their breadth and duration, several sources said.
Typically such deals restrict banks from working with rivals until the transaction closes or for a shorter period such as six months, two of the sources said.
Issuers - IPO - Competitors - Concurrent - Timetable
“Issuers sometimes don’t like it when you’re doing an IPO for the competitors on a concurrent timetable because they will worry that you might divulge information...
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