(Yicai Global) Jan. 12 -- WM Motor Technology, a new energy vehicle startup whose deliveries fell last year, is finally nearing its goal of going public in Hong Kong through a unit’s reverse merger with the listed arm of Apollo Future Mobility Group, whose shares fell on the announcement.

Apollo Future will purchase WM Motor Global Investment for USD2 billion by issuing 28.8 billion shares to WM Motor, which failed to complete a standalone initial public offering in Hong Kong last year, the Hong Kong-based buyer said in a statement yesterday.

Shares of Apollo Smart Mobility Group [HKG: 0860] closed 8.6 percent lower at 23 Hong Kong cents (3 US cents) each today, paring the company’s market capitalization to HKD2.24 billion (USD287 million).

After the backdoor listing is completed, Shanghai-based WM Motor and Apollo Future will jointly develop and mass-produce the smart sports sedan X@A, which will be priced at more than USD100,000, per today’s statement. 

Moreover, Apollo Future said it will raise HKD3.5 billion by issuing up to 7.1 billion shares. It will use 70 percent of the proceeds to develop and manufacture WM-branded supercars and smart electric passenger vehicles. A fifth will be spent on stabilizing its supply chain systems for batteries and chips. 

The merger’s due diligence should wrap up within two to three months, so the backdoor listing is expected to complete as soon as the next quarter, a person close to WM Motor told Yicai Global. 

The two companies are already affiliated, as WM Motor owns 23.7 percent of Apollo Future, which will rise to about 70 percent following the merger. WM Motor Global has an 80.9 percent stake in WM Motor.

From January to November last year, WM Motor delivered 29,400 vehicles, a 25 percent decline from a year ago, after ranking second among Chinese smart auto startups in 2019. By comparison, domestic rival Nio handed over 273,700 cars to buyers in 2022, per statistics from the China Passenger Car Association.

From 2019 to 2021, WM Motor lost CNY17.4 billion (USD2.6 billion), according to its IPO prospectus.

Today’s statement gave the carmaker’s valuation as USD2.5 billion, down 56 percent from 2021 after its Series D funding round closed.

WM Motor has raised money from three investors recently, including HKD250 million (USD32 million) from a well-know bank active in Hong Kong and Macau, CNY500 million from copper miner Amer International Group, and CNY1.5 billion (USD221.6 million) from Agile Group Holdings, the insider said. Except for the firm's managers, Agile is WM Motor’s main shareholder.

Editor: Emmi Laine, Xiao Yi