Chery Automobile, a Chinese car manufacturer, is aiming to raise as much as HK$9.14bn (approximately $1.17bn) through an initial public offering (IPO) in Hong Kong.
According to a recent submission to the Hong Kong stock exchange, the company plans to issue 297.4 million shares, with pricing set between HK$27.75 and HK$30.75. The final share price is anticipated to be disclosed on September 23.
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There is also a possibility to increase the offering by an additional 44.61 million shares if the overallotment option is utilised.
Chery intends to allocate about 10% of the shares to the public, with the remainder earmarked for institutional investors.
The IPO proceeds are earmarked for several uses: 35% will go toward developing new passenger vehicle models; 25% will fund R&D for next-gen vehicles and technologies; 20% will support the international market expansion; 10% will upgrade production facilities in Wuhu, Anhui; and 10% will cover working capital and general business needs.
Currently, the company has five brands, Chery, Jetour, Exeed, Icar, and Luxeed
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By GlobalDataThe IPO is said to be timed to capitalise on the growing global interest in the Chinese electric vehicle supply chain.
After a Hong Kong IPO in May, Contemporary Amperex Technology, an EV battery maker, witnessed an increase in its share price, reported South China Morning Post (SCMP).
Similarly, Hesai Group, a light detection and ranging (LiDAR) sensor supplier, exceeded its offer price by 10% on its first trading day, following a $531m fundraise.
Chery has recognised that its financial outcomes and expansion strategies might be influenced by a number of potential hurdles, such as geopolitical trade disputes and the competitive landscape.
The company operates in developing markets and anticipates expansion in several areas between 2025 and 2030.
In the initial quarter, more than one-third of Chery’s total revenue was generated from its international markets.
Founded in 1997, Chery manufactures a wide array of vehicles, including both conventional petrol-powered automobiles and electric vehicles.
The listing has garnered interest from over ten investors, including JSC International Investment Fund and the Hillhouse Group, who have committed to a six-month holding period post-listing.
Chery reported a 24.2% increase in revenue to 68.22bn yuan in the first three months of this year, with an adjusted profit of 4.86bn yuan.
The company’s efforts to list on the Hong Kong stock exchange follow a previous application in February and an attempt to raise funds onshore in 2004.
The 2008 conversion of Chery into a joint stock limited company was a strategic step towards scaling operations and fulfilling expansion goals.
