Evergrande’s electric car unit kicks off Star Market listing process, hires Haitong Securities for pre-listing tutoring

22-Oct-2020 Intellasia | South China Morning Post | 6:02 AM Print This Post

China Evergrande New Energy Vehicle Group, the carmaking arm of the world’s most indebted developer, has started preparing for a mainland share sale to fund its expansion and production capabilities in the world’s largest car market.

The Hong Kong-listed company said in an exchange filing on Monday evening that it has hired Haitong Securities to conduct the so-called pre-listing tutoring procedure, under which senior executives of Evergrande New Energy will be trained on how to prepare offer documents in accordance with listing rules.

Pre-listing tutoring is a compulsory procedure that every initial public offering applicant must go through before filing their listing plan to regulators, which can take between three and 12 months.

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The company had said last month that it planned to offer 1.556 billion shares. Based on Evergrande New Energy’s closing share price of HK$23.4 on Tuesday, which rose 9.6 per cent on the back of the announcement, the company could net fresh capital in the region of HK$36.4 billion (US$4.7 billion) on Shanghai’s Star Market.

Its parent China Evergrande, the mainland’s largest developer, had 835.5 billion yuan (US$125 billion) of outstanding loans as of June 30, up from about 800 billion yuan at the end of 2019, according to its latest interim report. Some 47.4 per cent of them mature within 12 months.

Evergrande New Energy is the latest carmaker to pursue fundraising on the Nasdaq-style Star Market, following on the heels of Geely Automobile Holdings, China’s largest private carmaker and the owner of Sweden’s Volvo Cars, and electric vehicle start-up WM Motor Technology.

“NEV [new-energy vehicles] is not only a carmaking sector, but also a new industry that involves lots of new technologies,” said Ding Haifeng, a consultant with Shanghai-based financial advisory firm Integrity. “More companies in this sector will look to raise funds on the Star Market.”

Last month, Hong Kong-listed Geely received a nod from the Shanghai Stock Exchange to launch a secondary offering on the Star Market, targeting proceeds of 20 billion yuan to finance the development of new technologies and models.

WM Motor said last week that it had recruited China Securities to kick start the pre-listing tutoring procedure. It did not disclose a targeted size for fundraising.

Overall, Chinese electric carmakers including NIO, Li Auto and Xpeng, have raised $8 billion in fresh capital from stock markets or investment funds this year to bolster their production and development capabilities.

In mid-September, Hong Kong-listed Evergrande New Energy announced it had raised HK$4 billion in a new round of fundraising from investors including Tencent Holdings, Sequoia Capital, Yunfeng Fund and Didi Chuxing.

The company unveiled the Hengchi 1 to Hengchi 6 new-energy vehicle models in August, which comprise SUVs, crossovers and saloons, but it did not provide any other details including pricing or their availability.

Evergrande New Energy, whose ambition is to become the world’s number one NEV maker in the next three to five years, posted loss of 2.46 billion yuan for the first half, widening from 1.98 billion yuan a year earlier.



Category: Hong Kong

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