Unlock Editor’s Digest Lock for Free
FT editor Roula Khalaf will select your favorite stories in this weekly newsletter.
Chinese electric vehicle battery manufacturer CATL said it would raise at least $4 billion in what is set to be Hong Kong’s biggest stock sales this year.
The company’s stock will be priced this week and will begin trading on May 20, according to a prospectus filed on the Hong Kong Stock Exchange on Monday.
Chinese oil companies Sinopec, Kuwait Investment Authority Sovereign Wealth Fund and Asian Investment Firm Hillhouse Capital lead a group of over 20 Cornerstone investors, including insurer Taikang Life and the Chinese Local Government Fund.
CATL already has stocks listed on China’s Shenzhen Stock Exchange, but is the world’s largest producer of EVS and energy storage systems batteries.
If demand is strong, secondary lists could raise more than $5 billion, and green shoe options (which allow underwriters to sell more shares than planned) will be exercised.
Hong Kong stock pricing was 1.4% below mainland prices as of the market closure on Friday. According to people close to the trade, the relatively small discount reflects strong investors’ demand. The stock trading at CATL’s deep Shenzhen jumped to almost 3% ($35.30) in its opening Monday.
CATL has grown rapidly behind the Chinese EV boom, embarking on ambitious global expansion plans, including building a European battery factory and licensing technology for US automakers.
The Ningde-based company in southeastern China has scrutinized from Washington on national security horrors, and there is uncertainty about its long-term position in the US market amid trade tensions between Beijing and Washington.
Monday’s application is a sign that the two biggest economies in the world may eliminate the trade war as the US said it had made “substantial progress” in two days of trade talks with Chinese officials in Geneva.
However, CATL has submitted that U.S. tariff policies are “evolving rapidly” and that it “cannot predict how tariff policies from different countries will evolve” or could affect its operations.
The submission also showed that US investment banks, including JPMorgan and Bank of America, are the main underwriters on the list despite a US Congressional Committee asking the country to drop out.
According to one banker close to negotiations, some US investors are still weighing their involvement in the sale of shares amid concerns over the addition of CATL, which added the Pentagon to the list of companies belonging to the Chinese military.
Such a designation has little legal implications, but it puts reputational damage and further scrutiny from US agencies.
The CATL repeated its denial in its filing of these claims on Monday. It said it had “never engaged in military-related businesses or activities,” and was “involved” with the US Department of Defense to “deal with the false designation.”
The company also noted that the designation only limits cooperation with a small number of US institutions and is not expected to have a significant impact on its business.
Recommended
With 11 major domestic manufacturing bases in China, CATL is rapidly expanding overseas with projects in Germany, Hungary, Spain and Indonesia. The filing said that about 90% ($3.5 billion) of new capital will be used to build Hungary’s production lines.
Of the company’s $500 billion revenue last year, 69.5% was derived from the Chinese market, with the rest mainly derived from overseas in Europe.
However, CATL, which has a larger profit than most of its rivals, has partnered with Tesla and Ford to obtain a license to manufacture battery manufacturing technology for US factories.
The filing also showed that EV batteries accounted for 70% of sales last year, followed by 16% of energy storage systems, with the rest accounting primarily for energy storage systems from battery materials, recycling and mineral resources.
