China's Zeekr prices US IPO at top of range to raise $441 million (updated)

LianBio

10/05/2024 10:40

(Changes attribution in paragraphs 1 and 2)
    By Echo Wang and Scott Murdoch
       NEW YORK, May 9 (Reuters) - Chinese electric vehicle
maker Zeekr Intelligent Technology  ZK.N  priced its U.S.
initial public offering (IPO) at the top of its indicated range,
raising $441 million, it said on Friday. 
    Zeekr, which is the premium brand of Chinese automaker
Geely, upsized its IPO to sell 21 million American Depositary
Shares (ADSs) at $21 per share. It had earlier planned to sell
17.5 million ADSs.
    The IPO gives Zeekr a fully diluted valuation, which
includes securities such as options and restricted stock units,
of $5.5 billion. On a non-diluted basis, the IPO values the
company at about $5.1 billion. 
    The company closed orders from investors a day earlier in
the bookbuilding process because of strong demand, Reuters
reported on Tuesday. 
    Three strategic investors accounted for $300 million worth
of stock sold in the IPO, with Zeekr's parent company Geely
Automobile  0175.HK  taking $271 million in shares, according to
a person familiar with the deal. Contemporary Amperex Technology
(CATL)  300750.SZ  took $19.1 million and Mobileye Global
 MBLY.O  $10 million, the person added.
    Geely had originally said it would take up to $320 million,
in the IPO, a term sheet from the deal's launch showed.
    Reuters had exclusively reported the pricing of the IPO
earlier on Thursday. 
    Even after the Zeekr deal was upsized, the value of shares
sold to investors outside those strategic buyers was small
compared to previous large China listings in New York.
    Geely, CATL and Mobileye did not immediately respond to a
request for comment.
    The IPO was multiple times oversubscribed, two sources said,
but analysts are not convinced there will be a rush of Chinese
companies listing in New York any time soon.
    "The Hong Kong market has to be revived for one to say that
Hong Kong and China is back," said Sumeet Singh, Aequitas
Research director who publishes on Smartkarma.
    "U.S. listings would be a second step after that and
probably won't take place until at least the U.S. elections are
out of the way."
    The strong demand for Zeekr’s IPO comes against a backdrop
of a fierce EV price war in China that has undercut profits,
leaving a number of companies to pursue expansion outside China
where they can charge more and beef up their margins.
    Zeekr is one of a number of Chinese automakers, including
BYD  002594.SZ , SAIC  600104.SS  and Great Wall Motor
 601633.SS  that have set their sights on Europe, rolling out
electric models as they seek to compete with legacy European
automakers on their own turf.
    BYD and state-backed Chery have already announced plans to
build cars in Europe.
    While Zeekr successfully pulled off its U.S. flotation, its
IPO valuation represents a climb-down from the $13 billion it
was valued at when it raised $750 million from new and existing
investors last year. 
    Zeekr delivered its first vehicle in October 2021. The
company delivered a total of about 196,633 cars, mostly in
China, as of Dec. 31.
    Since the start of the year, Zeekr's deliveries have
overtaken its nearest competitors. Zeekr delivered 49,148
vehicles in the first four months ended April 30, while Xpeng
delivered 31,214 units and Nio delivered 45,673 cars during the
same period, according to regulatory filings and press releases.
    Zeekr's prospectus disclosed a surge in total revenue to
51.67 billion yuan ($7.3 billion) in 2023, up from 31.9 billion
a year earlier. However, its loss from operations widened to
8.18 billion yuan from 7.15 billion.
    The Zeekr listing is the biggest Chinese flotation on U.S.
stock exchanges since 2021 when LianBio listed its shares in New
York. Last year, Zeekr had put its IPO plans on hold, Reuters
previously reported.
    The number of Chinese companies that have pursued stock
market flotations in the U.S. in the past few years has
plummeted, after Chinese ride-hailing giant Didi Global was
forced to delist its shares following a backlash from Chinese
regulators.

 (Reporting by Echo Wang in New York; additional reporting Scott
Murdoch in Sydney; Editing by Marguerita Choy and Stephen
Coates)
 ((Anirban.Sen@thomsonreuters.com; Twitter: @asenjourno; Reuters
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