Exclusive: Battery giant CATL says its HK listing will be smaller than expected

Chinese battery giant CATL’s fundraising in Hong Kong will “not be large” given its current cash reserves, the company told China Daily on Friday after it announced plans to seek a secondary listing in the city to strengthen its international expansion.

The specific fundraising amount will be determined on a comprehensive consideration of market conditions, investment environment, and regulatory requirements, CATL said.

This challenges speculation that the company plans to raise at least $5 billion which would make it the largest listing in Hong Kong since early 2021.

According to the Shenzhen-listed company’s earnings report, CATL has abundant cash on hand. As of Sept 30, its cash and cash equivalents stood at 234.95 billion yuan ($32.18 billion).

Its net profit for the third quarter rose 26 percent year-on-year to 13.1 billion yuan while revenue dropped 12.5 percent to 92.3 billion yuan versus the same period last year.

CATL said its listing in Hong Kong is to support global energy transition and transportation electrification, and facilitate expansion of its global footprint, adding that it is primarily aimed at “developing an international capital operation platform” instead of fundraising.

A logo of CATL is seen in Guangzhou, Guangdong province on Nov 24, 2023. (PHOTO / VCG)

The plan needs to be reviewed at CATL’s shareholders’ meeting, which is scheduled for Jan 17. Once approved, CATL will seek an appropriate opportunity to go public within 18 months, it said in a Shenzhen Stock Exchange filing.

“CATL’s expansion of overseas funding channels makes perfect sense given its internationalized sources of revenue and investment,” said Gary Ng, a senior economist at French investment bank Natixis. He added that CATL may see its listing status in Hong Kong as a standby for any future financing needs.

CATL, also known as Contemporary Amperex Technology Co., is the world’s largest electric vehicle (EV) battery maker. According to data released by South Korean agency SNE Research, CATL held a global market share of 36.8 percent share in EV batteries in the first 10 months of 2024.

The company has been ramping up efforts for global business expansion and developing overseas battery facilities. On Dec 10, CATL and carmaker Stellantis Group announced the establishment of a joint venture to build a battery plant in Spain, with an investment of up to 4.1 billion euros ($4.27 billion). Its footprint in Europe also includes an operating plant in Germany and a facility in Hungary, which is still under construction, the company’s website shows.

CATL’s onshore shares listed in Shenzhen edged up 0.2 percent on Friday, one day after its listing announcement, bringing advances this year to 67 percent.

Ouyang Shirui, director of Soochow Securities Hong Kong Research, said CATL’s secondary listing in Hong Kong marks an iconic move amid a wave of internationally oriented Chinese mainland bellwether enterprises accessing global capital markets. “Beyond fundraising, this move enhances global visibility and strengthens brand power,” she said.

In September, Shenzhen-listed home appliances maker Midea Group raised nearly $4 billion in Hong Kong’s biggest stock offering this year, followed by courier deliverer SF Holding’s $730 million secondary listing in Hong Kong.

However, a question mark still hangs over market sentiment as it struggles to navigate an increasingly complex economic landscape shaped by tailwinds, such as the mainland’s policy signals to boost consumption, alongside renewed concerns over slower-than-expected interest rate cuts and geopolitical dynamics after the US elections.

Conita Hung Lai-ping, a Hong Kong-based independent stock commentator, said CATL may not want to issue too many shares under the current investment climate.

For CATL, entering Hong Kong’s international platform is just the first step, Hung said. “The company can consider raising funds later through methods like share placement when market conditions improve,” Hung said.