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Chinese language electric-vehicle battery maker CATL stated it will increase no less than $4bn in what is ready to be Hong Kong’s largest share sale and the most important itemizing globally to this point this 12 months.
The corporate’s secondary itemizing shall be priced this week and the shares will start trading on Could 20, in keeping with a prospectus filed with the Hong Kong inventory trade on Monday.
Chinese language oil firm Sinopec, the Kuwait Funding Authority sovereign wealth fund and Asian funding agency Hillhouse Capital are main a gaggle of greater than 20 cornerstone traders, which additionally embody insurer Taikang Life and Chinese language native authorities funds.
CATL, which already has shares listed on China’s Shenzhen inventory trade, is the world’s largest producer of batteries for EVs and power storage programs.
The itemizing is ready to eclipse JX Superior Metals’ $3bn Tokyo preliminary public providing in March, in keeping with Dealogic knowledge, and will increase greater than $5bn if demand is robust and a greenshoe choice — permitting underwriters to promote extra shares than deliberate — is exercised.
The higher ceiling of the pricing of its Hong Kong shares is 1.4 per cent under its mainland value, as of market shut on Friday. The ultimate pricing would mirror a comparatively slim low cost between CATL’s mainland “A” shares and Hong Kong “H” ones, displaying robust investor demand, in keeping with an individual near the deal. Shenzhen-traded shares of CATL jumped 3.5 per cent to Rmb257 ($35.51) on Monday.
CATL has grown quickly on the again of China’s EV increase and has launched into an bold world enlargement plan, together with building battery factories in Europe and licensing expertise to US carmakers.
Based mostly in Ningde, south-eastern China, the corporate has additionally drawn scrutiny from Washington over nationwide safety fears and there’s uncertainty over its long-term place within the US market amid commerce tensions between Beijing and Washington.
Monday’s submitting got here because the US stated it had made “substantial progress” over two days of commerce talks with Chinese language officers in Geneva, an indication the world’s two largest economies may de-escalate their commerce warfare.
Nevertheless, CATL stated in its submitting that US tariff insurance policies are “quickly evolving” and it “can not predict how tariff insurance policies in varied international locations might additional evolve” or probably have an effect on its enterprise.
The submitting additionally confirmed that US funding banks, together with JPMorgan and Financial institution of America, are the primary underwriters of the itemizing, regardless of a US congressional committee final month calling for the nation’s banks to drop out of the deal.
Based on one banker near the negotiations, some US traders are nonetheless weighing their involvement within the share sale amid issues over the Pentagon’s addition of CATL to its listing of corporations with affiliations to the Chinese language navy.
Whereas such designations have little authorized impression, it dangers reputational injury and additional scrutiny from US businesses.
CATL reiterated its denial of those allegations in Monday’s submitting, saying that it has “by no means engaged in any military-related companies or actions” and is working with the US Division of Protection to “handle the false designation”.
The corporate additionally famous that the designation restricts it from working with a small variety of US businesses and isn’t anticipated to have a broader impression on its enterprise.
CATL, which has 11 main home manufacturing bases in China, is quickly increasing overseas with tasks in Germany, Hungary, Spain and Indonesia. Within the submitting, it stated round 90 per cent, or HK$27.6bn ($3.5bn), of the brand new capital shall be used for development of its Hungarian manufacturing traces.
Of the corporate’s $50bn in revenues final 12 months, 69.5 per cent have been derived from the Chinese language market, with the rest from abroad, primarily Europe.
Nevertheless, CATL, which has large economies of scale advantages over most of its rivals, has additionally been working with Tesla and Ford to license its battery manufacturing expertise for factories within the US.
The submitting additionally confirmed that EV batteries accounted for 70 per cent of final 12 months’s gross sales, adopted by power storage programs at 16 per cent and the rest largely from battery supplies, recycling and mineral assets.
