Scott Murdoch and Julie Zhu
HONG KONG (Reuters) - Shares of CATL (3750.HK) made their 16% debut in Hong Kong on Tuesday after China's electric vehicle battery giant raised $4.6 billion in the world's largest listing this year, thus boosting the prospects for Chinese companies' stock sales.
The CATL debut came despite increased market uncertainty, a slowdown in China's economy and the company was accused of working with the Chinese military in January on the U.S. Department of Defense roster.
Catl said in its prospectus that it is working with the U.S. department to address “false names”, with multiple bids from global investors, including from the U.S.
It was a good omen for other Chinese companies looking to raise funds in Hong Kong, when trade-related uncertainty surged fiscal debt and confidence in enduring American exceptionalism weakened confidence in U.S. assets.
The demand for CATL stocks is also partly due to the increasing positive sentiment towards China among global investors that have emerged since the beginning of the year.
CATL shares were sold at a high price of $311.40 in Hong Kong after selling shares at a stock of HK$263 per share during the listing. The stock closed at HK$306.20, up 16.4% from the quote price, compared with the main listing index gained 1.5%.
The company is also listed in Shenzhen and is the second largest active trading stock in Hong Kong. On the first day of trading, 27.69 million shares changed hands.
CATL aims to raise about $4 billion in listings, but adds to scale after strong demand from investors. The so-called "green shoes" option can still be exercised to increase its fundraising to $5.3 billion.
On this scale, this will be the largest list in Hong Kong since Kuaishou Technology raised $6.2 billion in 2021, according to LSEG data.
According to CATL's filing, the institutional division of the transaction was oversubscribed 15.2 times, while the retail part was more than 151 times.
"This list means our broader integration in the global capital markets and a new starting point for us to promote a global zero-carbon economy," said Robin Zeng, founder and chairman of CATL.
CATL said most of the funds raised will go to build a factory in Hungary, part of its plan to make batteries in Europe, such as automakers such as BMW, Stellantis and Volkswagen.
The deal means $7.73 billion raised in Hong Kong through its initial public offering and second listing, compared with $1.05 billion a year ago, according to LSEG data.
Bonnie Chan, CEO of Boriques operator Hong Kong Exchange and Clearing, said more than 40 companies listed in mainland China, known as A-share companies, are exploring the Hong Kong list.
“The main advantage of these companies going public in Hong Kong is that it will open an offshore fundraising platform … to support its offshore expansion plans,” she said.
Wang Shuguang, a member of the China International Capital Management Committee responsible for investment banking, said the listing of CATL could help restore Hong Kong's capital market.
CICC is a sponsor of CATL listing along with JPMorgan Chase, Bank of America and China Securities International.
Trade truce momentum
Bookkeeping for CATL stock sales began on May 12, the day when the United States and China announced a truce in the trade war, and has been spreading in global financial markets since early April.
According to two sources who directly understand the process, the deal has received an advance payment after launching last Monday, creating some additional impetus for CATL.
The tariff moratorium prompted some global lasting investors not to bid for CATL stock before to place orders.
CATL did not respond to a request for comment.
According to SNE Research, the company has been expanding its lead in the EV battery market, accounting for 38% of the global share in 2024, up from 36% in the same period last year.
Sources said CATL's decision to restrict our onshore investors from buying their stocks in Hong Kong products did not curb demand.
Some U.S. investors with offshore accounts can still participate, while others shrugged and shrugged, the U.S. Department of Defense’s designation to the company.
(Scott Murdoch's report in Sydney, Julie Zhu and Donny Kwok of Hong Kong; editor of Jamie Freed, Sumeet Chatterjee and Mark Porter