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Chinese electric-vehicle battery maker CATL announced plans to raise at least $4bn in what is expected to be Hong Kong’s largest share sale of the year. The company’s shares will be priced this week, with trading set to begin on May 20, as per a prospectus filed with the Hong Kong stock exchange on Monday.
Leading the group of more than 20 cornerstone investors are Chinese oil company Sinopec, sovereign fund Kuwait Investment Authority, and Asian investment firm Hillhouse Capital. Additionally, local Chinese government funds like Luoyang Sci-tech Investment and insurance firm Taikang Life are also among the cornerstone investors.
CATL, known as the world’s largest producer of batteries for electric vehicles and energy storage systems, already has shares listed on China’s Shenzhen stock exchange. The secondary listing in Hong Kong could potentially raise over $5bn if demand is strong, including the exercise of a greenshoe option.
The pricing of CATL’s Hong Kong shares is slightly below its mainland price, indicating strong investor demand. CATL’s shares in Shenzhen saw a 3% jump to Rmb255 ($35.30) at the Monday opening. The company has experienced significant growth due to China’s electric vehicle boom and has embarked on an aggressive global expansion strategy, including establishing battery factories in Europe and licensing technology to US carmakers.
Despite its success, CATL has faced scrutiny from Washington over national security concerns, particularly amid trade tensions between the US and China. The company’s filing on Monday highlighted uncertainties regarding US tariff policies and their potential impact on its business.
US investment banks such as JPMorgan and Bank of America are the main underwriters of the listing, despite calls from a US congressional committee for US banks to withdraw from the deal. Some US investors are still deliberating their participation in the share sale due to concerns about CATL’s alleged affiliations with the Chinese military.
CATL has vehemently denied these allegations in its filing, stating that it has never been involved in any military-related activities. The company is currently in discussions with the US Department of Defense to address the false designation and clarify any misunderstandings. While the designation may restrict CATL’s collaboration with a few US agencies, it is not expected to have a significant impact on its overall business operations.
