CATL, China’s fastest growing lithium battery maker, is planning to raise $2bn from an initial public offering to help fund its expansion as it attempts to become the world’s largest supplier of batteries for electric vehicles.
The offering comes as a handful of mostly East Asian companies angle for top positions in the battery industry, and as China — already the world’s largest EV market — seeks to increase the number of electric vehicles in the country.
In recent months, subsidies for electric cars have helped boost the valuation of Hong Kong-listed BYD, CATL’s main rival for the position of China’s top battery producer by output.
CATL said in its prospectus it was hoping to raise Rmb13.12bn ($1.98bn) by selling a 10 per cent stake on the Shenzhen stock exchange, suggesting a valuation of about $20bn.
Its valuation would be smaller than BYD’s $27bn, following a share price climb of about 50 per cent in just over two months to HK$71.5 on Tuesday.
“The [electric vehicle] market has made these battery companies hot these days,” said Dan Zhuang, an analyst at RHB OSK Securities in Hong Kong. “We have not yet seen a clear winner emerge in China.”
“（电动车）市场如今让这些电池公司变得炙手可热，”香港兴业侨丰证券(RHB OSK Securities)分析师Dan Zhuang表示，“我们还看不出谁是中国明显的胜出者。”
CATL said it would use capital raised from the offering to add 24GWh of battery making capacity in its home province of Fujian, and invest in research and development. That would represent a significant expansion for CATL, which had 7.6GWh of capacity last year, according to Goldman Sachs.
By comparison, Tesla has said its gigafactory in the Nevada desert will reach a capacity of 35GWh next year, although the US company is known for missing deadlines.
“They [CATL] have the potential to become the world champion. They are already accepted by global players,” said Junyi Zhang of NIO Capital, a venture fund focused on electric vehicles.
Backed by government policies, ranging from subsidies for electric vehicles to restrictions on foreign rivals — China’s battery companies are beginning to dominate an industry that has been led for three decades by South Korean and Japanese manufacturers such as Panasonic, which makes the battery cells for Tesla cars.
CATL has been at the centre of Beijing’s efforts to establish China as the leading country in the global EV supply chain. It has received at least Rmb880m in government subsidies in recent years, according to the prospectus.
The company sold 6.80GWh of batteries last year, and has supply arrangements with Volkswagen and BMW, it said. CATL made profits of Rmb2.3bn on revenue of Rmb6.1bn in the first half of this year, according to the prospectus.
But with the impact of subsidies now fading, companies such as CATL “need to enlarge their volume to keep such a high profit margin”, according to Mr Zhang.
China Securities, Goldman Sachs and Industrial Securities are underwriters for the IPO. The listing is expected to take place within months, according to a person familiar with the situation.
中信建投证券(China Securities)、高盛和兴业证券(Industrial Securities)是此次IPO的承销商。知情人士透露，此次上市预计将在几个月内实现。