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Shares in leading Chinese battery maker CATL soared more than 16 per cent on their first trading day in Hong Kong after the world’s biggest listing so far this year.
The secondary offering raised at least $4.6bn, with the amount set to rise to $5.3bn if an option allowing underwriters to sell more shares than planned is exercised.
It is among the largest offerings in Hong Kong by Chinese companies already listed on the mainland in recent years, with CATL also quoted in Shenzhen.
Founder Robin Zeng banged a gong to celebrate the start of trading at the Hong Kong stock exchange. He was joined by Hong Kong financial secretary Paul Chan and the deputy mayor of the coastal city of Ningde in south-eastern China, where the company has its headquarters.
CATL was not satisfied with being “just a battery component manufacturer” and was poised to be the “pioneer” of the zero-carbon economy, Zeng said on Tuesday.
CATL accounts for about 37 per cent of the world’s EV and energy storage battery markets. A supplier to Tesla, BMW and Volkswagen, the cash-rich company had sought an offshore listing to raise non-renminbi funding for its overseas expansion, notably a $7.3bn factory in Hungary.
The listing had the support of American banks, while a US asset management firm was a key investor, despite the geopolitical tensions swirling around the deal.
In January, the battery maker was added to a Pentagon blacklist of companies believed to have ties to the Chinese military, although it has denied any such links.
A Republican lawmaker in April urged JPMorgan Chase and Bank of America to halt work on the listing, in a warning sign of the politicisation of such capital markets deals. The US lenders remained as lead bankers on the transaction, along with state-backed China International Capital Corporation and China Securities.
Demand was boosted by global investors’ growing shift out of American assets, including the US dollar, according to analysts.
Market participants suggested the listing played a role in pushing up the Hong Kong dollar exchange rate earlier in May as investors in the offering bought Hong Kong dollars and speculators bet on it to rise, forcing the Hong Kong Monetary Authority to intervene and buy almost US$17bn to hold down the exchange rate.
“We are in this kind of unique scenario, where you have a well-known company issuing new shares, also at a time when you have a macro factor where investors want to diversify away from the US dollar-related assets,” said Jason Lui, head of Asia-Pacific equity and derivative strategy at BNP Paribas.
Analysts and deal participants said they believed heightened demand enabled CATL to price at the top end of HK$263 a share — only a roughly 7 per cent discount to the price at the close on Monday in Shenzhen, where its shares trade at almost 18 times forward earnings.
Chinese “A-shares” on mainland exchanges typically trade at a double-digit percentage premium to their “H-share” equivalents in Hong Kong, and initial public offerings are usually priced at a discount to entice buyers.
Wang Shuguang, a management committee member at Chinese brokerage CICC, said CATL’s successful debut would encourage more leading Chinese companies across various sectors to pursue listings in Hong Kong.
“The A-share market provides robust liquidity and higher valuations,
while Hong Kong’s market enables flexible financing,” Wang said. “By leveraging both, companies can access diverse financing options and boost the financial agility of their global operations.”
Chinese oil company Sinopec, the Kuwait Investment Authority sovereign wealth fund and Asian fund Hillhouse Investment invested before the shares went public as so-called cornerstone investors. They were joined by US-owned Oaktree Capital Management and Lingotto, an investment vehicle backed by the Italian industrialist Agnelli family, as well as units of two Chinese state-owned groups, Postal Savings Bank of China and insurer Taikang Life.
One person familiar with the deal told the Financial Times that other US investors chose to wait to invest until after the listing in order to reduce scrutiny from Washington.
Meanwhile, many onshore American investors will not have access to the shares, given the listing was filed under a “Reg S” rather than “144A” regulation under US securities law. This exempts CATL from some disclosure obligations and means US investors without offshore accounts are barred from investing.
