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Shares in main Chinese language battery maker CATL soared greater than 16 per cent on their first buying and selling day in Hong Kong after the world’s greatest itemizing to this point this yr.
The secondary providing raised no less than $4.6bn, with the quantity set to rise to $5.3bn if an choice permitting underwriters to promote extra shares than deliberate is exercised.
It’s among the many largest choices in Hong Kong by Chinese language firms already listed on the mainland in recent times, with CATL additionally quoted in Shenzhen.
Founder Robin Zeng banged a gong to rejoice the beginning of buying and selling on the Hong Kong inventory alternate. He was joined by Hong Kong monetary secretary Paul Chan and the deputy mayor of the coastal metropolis of Ningde in south-eastern China, the place the corporate has its headquarters.
CATL was not glad with being “only a battery part producer” and was poised to be the “pioneer” of the zero-carbon financial system, Zeng mentioned on Tuesday.
CATL accounts for about 37 per cent of the world’s EV and vitality storage battery markets. A provider to Tesla, BMW and Volkswagen, the cash-rich firm had sought an offshore itemizing to boost non-renminbi funding for its abroad growth, notably a $7.3bn manufacturing unit in Hungary.
The itemizing had the assist of American banks, whereas a US asset administration agency was a key investor, regardless of the geopolitical tensions swirling across the deal.
In January, the battery maker was added to a Pentagon blacklist of firms believed to have ties to the Chinese language army, though it has denied any such hyperlinks.
A Republican lawmaker in April urged JPMorgan Chase and Financial institution of America to halt work on the itemizing, in a warning signal of the politicisation of such capital markets offers. The US lenders remained as lead bankers on the transaction, together with state-backed China Worldwide Capital Company and China Securities.
Demand was boosted by international traders’ rising shift out of American belongings, together with the US greenback, in response to analysts.
Market contributors steered the itemizing performed a job in pushing up the Hong Kong greenback alternate charge earlier in Could as traders within the providing purchased Hong Kong {dollars} and speculators wager on it to rise, forcing the Hong Kong Financial Authority to intervene and purchase virtually US$17bn to carry down the alternate charge.
“We’re in this type of distinctive state of affairs, the place you have got a widely known firm issuing new shares, additionally at a time when you have got a macro issue the place traders wish to diversify away from the US dollar-related belongings,” mentioned Jason Lui, head of Asia-Pacific fairness and by-product technique at BNP Paribas.
Analysts and deal contributors mentioned they believed heightened demand enabled CATL to cost on the prime finish of HK$263 a share — solely a roughly 7 per cent low cost to the worth on the shut on Monday in Shenzhen, the place its shares commerce at virtually 18 occasions ahead earnings.
Chinese language “A-shares” on mainland exchanges usually commerce at a double-digit share premium to their “H-share” equivalents in Hong Kong, and preliminary public choices are often priced at a reduction to entice consumers.
Wang Shuguang, a administration committee member at Chinese language brokerage CICC, mentioned CATL’s profitable debut would encourage extra main Chinese language firms throughout numerous sectors to pursue listings in Hong Kong.
“The A-share market gives strong liquidity and better valuations,
whereas Hong Kong’s market allows versatile financing,” Wang mentioned. “By leveraging each, firms can entry various financing choices and increase the monetary agility of their international operations.”
Chinese language oil firm Sinopec, the Kuwait Funding Authority sovereign wealth fund and Asian fund Hillhouse Funding invested earlier than the shares went public as so-called cornerstone traders. They had been joined by US-owned Oaktree Capital Administration and Lingotto, an funding automobile backed by the Italian industrialist Agnelli household, in addition to items of two Chinese language state-owned teams, Postal Financial savings Financial institution of China and insurer Taikang Life.
One particular person acquainted with the deal instructed the Monetary Occasions that different US traders selected to attend to take a position till after the itemizing to be able to cut back scrutiny from Washington.
In the meantime, many onshore American traders won’t have entry to the shares, given the itemizing was filed underneath a “Reg S” quite than “144A” regulation underneath US securities regulation. This exempts CATL from some disclosure obligations and means US traders with out offshore accounts are barred from investing.
