Unlock the Editor’s Digest without spending a dime
Roula Khalaf, Editor of the FT, selects her favorite tales on this weekly publication.
Chinese language electric-vehicle battery maker CATL stated it might elevate at the least $4bn in what is about to be Hong Kong’s largest share sale this yr.
The corporate’s shares might be priced this week and start trading on Could 20, in line with a prospectus filed with the Hong Kong inventory trade on Monday.
Chinese language oil firm Sinopec, sovereign fund Kuwait Funding Authority and Asian funding agency Hillhouse Capital are main a bunch of greater than 20 cornerstone buyers.
Native Chinese language authorities funds, together with Luoyang Sci-tech Funding, and insurance coverage agency Taikang Life, are additionally among the many cornerstone buyers.
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 techniques.
The secondary itemizing might elevate greater than $5bn if demand is powerful and a greenshoe possibility — which permits underwriters to promote extra shares than deliberate — is exercised.
The pricing of its Hong Kong shares is 1.4 per cent under its mainland value, as of market shut on Friday. The comparatively small low cost displays stronger investor demand, in line with an individual near the deal. Shenzhen-traded shares of CATL jumped virtually 3 per cent to Rmb255 ($35.30) on the Monday opening.
CATL has grown quickly on the again of China’s EV increase and has launched into an formidable international enlargement plan, together with building battery factories in Europe and licensing know-how to US carmakers.
Based mostly in Ningde, south-eastern China, the corporate has additionally drawn scrutiny from Washington over nationwide safety fears and there may be 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 conflict.
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 could additional evolve”, or probably affect its enterprise.
The submitting additionally confirmed that US funding banks, together with JPMorgan and Financial institution of America, are the principle underwriters of the itemizing, regardless of a US congressional committee on April 17 calling for US banks to drop out of the deal.
In line with one banker near the deal, some US buyers are nonetheless weighing their involvement within the share sale amid issues over the Pentagon’s addition of CATL to its checklist of corporations with affiliations to the Chinese language army.
Whereas such designations have little authorized affect, it dangers reputational harm and additional scrutiny from US businesses.
CATL reiterated its denial in Monday’s submitting of those allegations. It stated that it has “by no means engaged in any military-related companies or actions” and stated it’s “participating” with the US Division of Protection to “tackle the false designation”.
The corporate additionally famous that the designation solely restricts it from working with a small variety of US businesses and isn’t anticipated to have a broader affect on its enterprise.
