By Scott Murdoch
(Reuters) - Chinese battery maker CATL aims to raise at least HK$31.01 billion (US$3.99 billion) in its Hong Kong listing.
According to documents filed by the Hong Kong Stock Exchange, the electric vehicle battery manufacturer sold for 117.9 million shares, with a maximum offer price of HK$263 per share.
If the offer size adjustment option and the so-called Greenshoe option were to be exercised, the size of the deal could increase to about $5.3 billion.
CATL rose 3.6% in Shenzhen on Monday after the start of Hong Kong trading, reaching a six-week high. In China's blue chip CSI300 index, the return increased by more than 0.9%.
According to Dealogic Data, CATL raised $4 billion means the listing is the largest list so far this year, beating JX Advanced Metal to beat JX Advanced Metal’s $3 billion IPO in Tokyo.
In Hong Kong, stock sales will be the biggest since MIDEA Group raised $4.6 billion last year.
The prospectus shows that more than 20 cornerstone investors led by Sinopec and Kuwait Investment Authority have subscribed to purchase approximately $2.62 billion worth of CATL stock.
Two sources who know the matter directly say that the agency’s bulk order book already covers the needs of investors. Sources cannot be named for discussion of undisclosed information.
CATL did not immediately respond to a request for comment for the demand.
The quotation size adjustment option means that the number of shares can increase by 17.7 million shares to an additional increase of HK$4.65 billion (US$598 million). There is a Greenshoe option that can further sell up to 17.7 million shares of shares.
The stocks are due to prices between Tuesday and Friday, and the final price will be announced on or before May 19, the documents show.
The prospectus shows that Hong Kong retail investors will have 8.8 million shares to choose from.
The company said about 90% of the proceeds from the money were about HK$27.6 billion to build its planned Hungarian plant, part of its plan to make batteries for automakers such as BMW, Stellantis and Volkswagen in Europe.
The plant's first phase investment of 2.7 billion euros ($3.03 billion) will begin production of batteries this year. Its purpose is to start construction in Phase 2 later this year.
CATL's Hong Kong stock will be discounted at a smaller discount on Friday's closing price, and trading will begin on May 20 if the stock price is HK$263 per share.
The prospectus says CATL has obtained a waiver from the Hong Kong Stock Exchange to not publish the minimum price of the stock, as it could affect the trading of its Shenzhen listed stocks.
Pay close attention to the United States - China Trade War
The documents show that U.S. onshore investors will not be able to buy CATL shares in Hong Kong transactions, but many of these funds have offshore operations that can be involved.
The company's Chinese company was listed on the U.S. Department of Defense in January and said it cooperated with the Chinese military. Catl said in its prospectus, it is working with the U.S. department to address “false names.”
"This does not limit us to conduct business with a few entities other than the U.S. government authorities and therefore it is not expected to have a material adverse impact on our business," it said.
CATL's book building is amid constructive negotiations held in Geneva over the weekend to downgrade its trade war, but Washington's 145% tariff on Chinese goods and Beijing's 125% tariff on U.S. goods remain.
Catl's prospectus said: "Tariff policies are developing rapidly. At present, we cannot accurately assess the potential impact of such policies on our business and we will closely monitor the situation."
($1 = 7.7759 Hong Kong USD, 7.2364 Chinese RMB, 0.8906 Euros)
(1 Hong Kong USD = 0.9306 Chinese RMB)
(Reported by Himanshi Akhand in Bangalore, Scott Murdoch in Sydney.