Contemporary Amperex Technology Co. Ltd., the largest manufacturer of electric vehicles batteries in the world (CATL), has applied for secondary listing in Hong Kong. This could be Hong Kong’s biggest stock offering since years.
This move, by Shenzhen’s battery company, which is a major supplier of batteries to Tesla, Volkswagen and other automakers, highlights Hong Kong as an important capital raising hub for Chinese companies.
Analysts predict a rebound of $20 billion in Hong Kong initial public offering this year.
CATL appointed JPMorgan as the lead bank for this offering. Goldman Sachs Morgan Stanley and UBS were also involved.
CATL is in a difficult situation as a result of the listing.
Last month, the company’s name was placed on a US “blacklist” for possible ties with China’s military. This could pose a challenge to its expansion overseas.
CATL stated in its prospectus that it considered the designation a mistake, and was working actively to remove it.
This restriction restricts the company from dealing with some US Government agencies, but it does not affect its commercial activities globally.
CATL can raise as much as $7 billion
Market sources indicate that CATL could potentially raise $7 billion depending on the market.
Morgan Stanley estimated earlier that this listing could generate as much as $ 7,7 billion.
The funds will be used to expand the company’s global reach, which includes a new facility in Hungary as well as a joint venture in Spain with Stellantis.
CATL also invests in Indonesian battery projects as part of a broader strategy designed to consolidate its dominant position in the EV batteries market.
CATL, despite its leadership in the market, has warned that lower prices could lead to a revenue drop of as much as 11% by 2024.
In 2023, the company reported revenue exceeding $50 billion. It has been the leader in the global EV batteries industry for 8 years in a row, with a market share of 38% in 2024.
It expects net profit growth to be up to 20 percent for the last year. This is its lowest pace since 2019.
CATL listing can boost Hong Kong capital market
The listing of CATL is likely to be an important test for Hong Kong’s stock exchange, which has been struggling with low deal flow in recent years.
Early 2025 saw a revival in the city’s capital market, largely due to renewed investor confidence.
Hang Seng Index increased 13% in the last month. This was boosted by optimism after breakthroughs made in artificial intelligence, and an improved economic outlook.
Gary Ng told The Financial Times that it was too soon to declare Hong Kong’s return.
Ng stated that the CATL listing shows that Hong Kong is still a good option for Chinese companies seeking funding overseas. However, he added that equity investors are sceptical about valuations because of China’s slowing growth and geopolitics.
Hong Kong’s Investment Banks may also only see modest gains as a result of the renewed IPO activities.
According to a recent report in The Financial Times, the rising competition among Chinese banks is causing a downward pressure on fees charged for transactions like CATL. This makes it more difficult for international banks to benefit from this listing boom.
CATL also warned of currency risk in its heavily redacted document, noting fluctuations in the Renminbi may impact on their ability to pay out dividends in Hong Kong Dollars.
These concerns are a reflection of the broader uncertainty surrounding Chinese companies seeking to list on foreign exchanges amid unstable economic conditions.
Investors will closely monitor CATL’s Hong Kong debut to determine if the offering will be able to reinvigorate Hong Kong’s IPO Market and if geopolitical risk will present any additional obstacles to CATL’s global ambitions.
The post CATL’s Hong Kong debut: Will the EV Battery Giant’s Hong Kong debut revitalize the capital markets? This post may change as new information becomes available
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