Chinese drone maker EHang plans U.S. IPO: sources

HONG KONG (Reuters) - Chinese drone maker EHang is planning a U.S. initial public offering (IPO) this year, according to two people with direct knowledge of the matter, with one saying it could raise between $400 and $500 million.

FILE PHOTO: Autonomous aerial vehicle company EHang delivers coffee with its Falcon drone to the delegation on a government-organised tour to the Guangdong-Hong Kong-Macao Greater Bay Area, in Guangzhou, Guangdong province, China February 28,2019.REUTERS/Yuyang Wang

Morgan Stanley and Credit Suisse are working on the offering, the people said. Another person said the deal was unlikely to be as large as $500 million.

Credit Suisse declined to comment. EHang and Morgan Stanley did not reply to requests for comment.

Founded in 2014 and headquartered in Guangzhou province, EHang first made headlines in 2016 when it unveiled a passenger drone concept which it said would retail at up to $300,000.

Early last year it said it had completed tests for the vehicle which is capable of carrying one person at speeds of up to 130 kph.

In May EHang broke the Guinness World Record for most drones flown simultaneously in a 13-minute flight that involved 1,374 drones spread over a kilometer.

China has championed rapid development in its tech sector in a bid to build world-leading firms and reduce dependence on foreign products, including semiconductors, robots and drones.

Global spending on drones was estimated to reach $9 billion last year and is expected to grow at a compound annual growth rate of 30 percent in the next five years, according to research firm IDC, which estimates more than half of that spending will be on drones for commercial use.

EHang specializes in aerial landscaping. In consumer drones it is dwarfed by fellow Chinese drone maker SZ DJI Technology Co Ltd, which is the world’s largest maker of non-military drones and plans to list in either Hong Kong or mainland China, people familiar with the matter told Reuters last year.

EHang joins a host of other Chinese start-ups seeking to go public in the United States, such as Tencent-backed live game-streaming platform Douyu, which has filed confidentially, according to a person with knowledge of the matter.

Luckin Coffee, a Chinese rival to Starbucks, has also tapped three banks for a U.S. IPO which could value it at around $3 billion.

Chinese companies raised $9.1 billion in U.S. IPOs last year, the highest since 2014 when e-commerce giant Alibaba went public with a $25 billion IPO, according to Refinitiv data.

Reporting by Julia Fioretti, additional reporting by Josh Horwitz in Shanghai; Editing by Susan Fenton