Chinese electric vehicle battery company CATL plans to raise $4 billion through its upcoming stock listing in Hong Kong on May 20. This makes it the city’s biggest initial public offering (IPO) this year so far, according to a statement released on Monday.
CATL is a world leader in making electric vehicle (EV) batteries. It produces over one-third of all EV batteries sold around the world and works with big companies like Tesla, Mercedes-Benz, BMW, and Volkswagen.
The company is already listed on the stock exchange in Shenzhen, and it announced plans to also list in Hong Kong in a filing made in December.
According to a prospectus filed Monday, CATL will offer approximately 117.9 million units priced at up to HK$263 per share ($33.8) for total expected proceeds of HK$31.01 billion.
The listing is set to take place next Tuesday (May 20).
According to the prospectus, key investors, such as Sinopec and the Kuwait Investment Authority, have agreed to purchase shares worth HK$2.62 billion.
Founded in 2011 in the eastern Chinese city of Ningde, Contemporary Amperex Technology Co., Limited (CATL) was initially propelled to success by rapid growth in the domestic market.
However, the world’s biggest electric vehicle market has recently started to see a drop in sales due to a general slowdown in consumer spending.
These trends have caused a tough price battle in China’s large electric vehicle market, making it hard for smaller companies to compete and stay financially healthy.
However, CATL continues to perform well, with its net profit rising by 32.9 percent in the first quarter.
The funds raised from the secondary listing could help CATL speed up its expansion in Europe.
The battery company is building its second factory in Hungary after opening its first one in Germany in January 2023.
CATL said it would partner with car company Stellantis in December to build a $4.3 billion factory in Spain.
The factory is expected to start making EV batteries by the end of 2026.
Experts said that CATL’s stock offering could be a huge success and help improve Hong Kong’s position as a place for companies to list their shares.
Hong Kong’s stock exchange hopes that big Chinese companies will list their shares again to become the world’s leading place for IPOs.
Since 2020, when China started tightening regulations, many big Chinese companies paused their plans to list on the stock market, causing a steady drop in new offerings in Hong Kong.
In January, the US Defense Department added CATL to a list of companies it considers to be linked to the Chinese military.
In April, the United States House Select Committee on the Chinese Communist Party pointed out CATL’s inclusion on the list and asked two American banks to pull out of the IPO deal because the company is linked to the Chinese military.
Beijing has called the list “suppression,” and CATL has denied being involved in any military-related activities.
According to Bloomberg, CATL plans to make the deal as a “Reg S” offering, which doesn’t allow sales to US onshore investors, limiting the company’s exposure to legal risks in the United States.
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