Contemporary Amperex Technology Co. Ltd. (CATL), a key electric vehicle battery supplier to Tesla (TSLA), is eyeing a $4 billion secondary listing on the Hong Kong Stock Exchange. The share sale was launched today at a small discount to its domestic stock price in Shenzhen on Friday. CATL is offering a base of 117.89 million shares at a maximum offer price of HK$263, valuing the listing at roughly HK$31 billion. CATL stock is expected to start trading in Hong Kong on May 20.
Additionally, CATL has the option to exercise a “greenshoe” over-allotment, allowing it to sell up to 38 million additional shares combined. Considering the upsize offering, CATL’s initial public offering (IPO) could become the largest new share sale in Hong Kong, following Kuaishou Technology’s $6.2 billion IPO in January 2021. CATL aims to utilize about 90% of the proceeds to develop its Hungary plant, and the rest directed toward working capital and other general corporate purposes.
CATL’s Much-Awaited HK Listing Goes Live
CATL has drawn up to $2.63 billion from cornerstone investors, including Chinese state-owned oil company Sinopec, the Kuwait Investment Authority sovereign-wealth fund, and alternative-asset manager Hillhouse Investment. CATL’s secondary listing has faced a series of hurdles, with the U.S. adding the EV maker to a U.S. Defense Department list of companies that were allegedly working with China’s military. Additionally, the U.S. Congressional panel stopped CATL’s sponsors JPMorgan (JPM) and Bank of America Securities (BAC) from working on the deal. However, CATL has constantly denied any involvement with military-related activities and both banks stuck with the deal.
Notably, CATL has opted for Regulation S in its prospectus, which prohibits U.S. onshore funds from participating in the offer. The EV giant remains cautious about the implications of the ongoing U.S.-China trade war, although the U.S. accounts for very little revenue for the Chinese company. Approximately 70% of its sales are generated from China. CATL noted in its prospectus that “Tariff policies have been rapidly evolving. Currently, we cannot accurately assess the potential impact of such policies on our business, and we will closely monitor the relevant situation.”
CATL is one of the key players in the EV industry, supplying EV batteries to major automakers including Tesla, Ford (F), Volkswagen (VWAGY), and Hyundai. According to South Korean market researcher SNE Research, CATL accounted for nearly 39% share of the global EV battery market in the January-March period.
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