Unlock the Editor’s Digest without spending a dime
Roula Khalaf, Editor of the FT, selects her favorite tales on this weekly e-newsletter.
China’s electrical car champion BYD mentioned on Tuesday it had raised $5.6bn within the largest share sale in Hong Kong in 4 years and the most important fairness follow-on providing within the world automotive sector in a decade.
The Warren Buffett-backed firm bought 129.8mn shares at HK$335.20 apiece within the deal, in accordance with a inventory trade submitting, representing an 8 per cent low cost to its Monday closing worth, The share providing had been elevated from 118mn, in accordance with time period sheet particulars seen by the Monetary Occasions.
Its Hong Kong-listed shares fell almost 7 per cent on Tuesday, however they’re nonetheless up by greater than 30 per cent to date this yr.
The providing mirrored Tesla’s main rival’s rising starvation for funds to gasoline its abroad growth and the pattern this yr of share gross sales by mainland-listed firms within the metropolis that marks a restoration in market sentiment and investor curiosity in H shares — these of Chinese language mainland firms listed in Hong Kong.
“BYD has lots of free money stream and web money in China, nevertheless it prices lots to transmit the [renminbi] into the foreign money outdoors China,” Citi analysts wrote in a analysis notice. “[It] additionally lacks flexibility to get common approvals through the preliminary abroad capital expenditure cycle fulfilment interval.”
The share inserting will strengthen BYD’s “capability to additional advance its technological capabilities and speed up its abroad growth”, the corporate mentioned within the submitting.
Shenzhen-based BYD has been making an aggressive push into main markets throughout the globe, with plans to construct localised manufacturing traces in Hungary, Turkey and Brazil underneath approach.
China’s international funding curbs have prompted some homegrown firms with worldwide ambitions to hunt offshore H-share points. The world’s largest EV battery maker CATL and China’s largest car exporter Chery each filed for a Hong Kong itemizing final month.
BYD’s share sale was the most important in Hong Kong since food-delivery platform Meituan raised $10bn in 2021. Goldman Sachs, UBS and Citic have been the deal’s total coordinators.
The transaction attracted long-only funds, sovereign wealth funds and the United Arab Emirates-based Al-Futtaim household workplace as a strategic investor, with the order e book lined a number of instances, the group mentioned. The Al-Futtaim group distributes BYD automobiles within the UAE and Saudi Arabia.
European and Center Japanese funds have been closely concerned within the deal, in accordance with one particular person aware of the transaction. Center Japanese buyers have been enjoying an more and more vital function in China’s fast-growing car sector. In late 2023, New York-listed EV maker Nio secured $2.2bn from CYVN, an Abu Dhabi funding group, following a $1bn injection from the identical investor earlier that yr. Across the similar time, Pony.ai, a Chinese language self-driving start-up listed on Nasdaq, scored $100mn from Saudi Arabia’s Neom.
In China, BYD’s automobiles account for about one-third of all new EVs bought, together with pure battery automobiles and plug-in hybrids. Final yr, the corporate bought 433,000 autos in abroad markets, accounting for greater than 10 per cent of its complete gross sales quantity.
