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By Scott Murdoch and Julie Zhu
HONG KONG (Reuters) - Shares in CATL (3750.HK) closed 16% higher on their Hong Kong debut on Tuesday after the Chinese electric vehicle battery giant raised $4.6 billion in the world's largest listing this year, boosting prospects for equity sales by Chinese companies.
CATL's strong debut came despite heightened market uncertainty, a Chinese economic slowdown, and the company being placed on a U.S. Department of Defense list in January of companies accused of working with the Chinese military.
With CATL saying in its prospectus that it was working with the U.S. department to address the "false designation", global investors, including from the United States, put in bids for multiple times the number of shares on offer.
That augurs well for other Chinese companies looking to raise funds in Hong Kong, at a time when trade-related uncertainties, ballooning fiscal debt and weakened confidence about enduring U.S. exceptionalism have weighed on U.S. assets.
The demand for CATL shares is also partly driven by an increasingly positive sentiment towards China among global investors that has emerged since the start of the year despite the Sino-U.S. tariff war.
CATL shares traded as high HK$311.40 each in Hong Kong after the firm sold shares at HK$263 apiece in the listing. The stock closed at HK$306.20, up 16.4% from the offer price and compared to a 1.5% surge in the main Hang Seng index.
The company, which is also listed in Shenzhen, was the second most actively traded stock by turnover in Hong Kong, with 27.69 million shares worth HK$8.28 billion changing hands on its first day of trading.
CATL had aimed to raise about $4 billion in the listing but increased the size following the strong demand from investors. A so-called "green shoe option" can still be exercised that would take the size of its fundraising to $5.3 billion.
At that size, it would be the largest listing in Hong Kong since Kuaishou Technology raised $6.2 billion in 2021, according to LSEG data.
The institutional tranche of the deal was oversubscribed 15.2 times, according to CATL's filings, while the retail portion was 151 times oversubscribed.
"This listing means our wider integration into the global capital market and a new starting point for us to promote the global zero-carbon economy," CATL founder and Chairman Robin Zeng said at the listing ceremony.
'Offshore expansion'
CATL has said that most of the funds raised would be used to build a factory in Hungary, part of its plan to make batteries in Europe for automakers such as BMW, Stellantis and Volkswagen.