Shares of leading Chinese battery maker CATL grew 12.6% as trading began on Tuesday, and retail investors then strong demand for the world's largest list of year to date.
Hong Kong's secondary products raised at least $4.6 billion, and if the underwriter sells more than the planned shares, the amount will increase to $5.3 billion. It is one of the largest products in Hong Kong that have been listed on the mainland in Hong Kong, and it also quotes CATL in Shenzhen.
Founder Robin Zeng beat the gong to celebrate the start of trading on the Hong Kong Stock Exchange. He was joined by Hong Kong's Chancellor Paul Chan and the deputy mayor of Ningde, a coastal city in southeast China, where the company has its headquarters.
Zeng said in a speech on Tuesday that CATL was not satisfied with "just battery module manufacturers", adding that the company is expected to be a "pioneer" in the zero-carbon economy.
CATL is the largest electric vehicle battery pack in the world. The cash-rich company, a supplier of Tesla, BMW and Volkswagen, seeks to go public offshore to raise non-renal funds for its overseas expansion, especially at its $7.3 billion factory in Hungary.
The listing was backed by Bank of America, and a U.S. asset manager is the main investor on the list, although geopolitical tensions circulate around the deal.
According to analysts, the growing shift from U.S. assets, including the U.S. dollar, has strengthened demand.
Market participants suggested that the listing played a role in raising Hong Kong's exchange rate in early May, as investors buying Hong Kong dollars and speculators bets would rise, forcing Hong Kong monetary authorities to step in and buy nearly $17 billion to lower the exchange rate.
“We are in this unique situation where you own a well-known company to issue new shares, and when you have macro factors, investors want to diversify from assets related to the US dollar,” said Jason Lui, head of equity and derivatives strategy at BNP Paribas in Asia Pacific.
Analysts and trade participants said they believe the increase in demand has brought the CATL price to its highest price of HK$263 per share, while the price listed in Shenzhen on Monday was only about 7% off. China’s “A-shares” on Mainland exchanges are usually traded at a double-digit premium for its “H-Share” equivalent in Hong Kong, while IPOs usually enjoy discounted prices that attract buyers at discounted prices.
Sinopec, Kuwait Investment Agency sovereign wealth fund and Asian fund Hillhouse invested before stocks are publicly invested in the so-called cornerstone investors. The Oaktree Capital Management and Lingotto, which they own, are investment vehicles backed by the family of Italian industrialists Agnelli, as well as units of two Chinese state-owned groups, China Post Bank and insurance company Taikang Life.
Other U.S. investors chose to wait for investment until after listing to reduce scrutiny in Washington, one familiar with the deal told the Financial Times.
Republican lawmakers in April urged JPMorgan Chase and Bank of America to stop working on the list, a warning sign of the politicization of such capital market transactions.
Meanwhile, many onshore investors will not be able to obtain stocks, given that the listing was filed under the “Reg s” rather than the “Reg s” under the U.S. Securities Act. This exempts CATL from certain disclosure obligations, which means that investments are prohibited by U.S. investors without offshore accounts.
The main bankers of the deal are state-backed China International Capital Corporation, China Securities, as well as Bank of America and JPMorgan Chase.