CATL's 5 bln-dollar listing future-proofs enviable lead
Technology
CATL’s 5 bln-dollar listing future-proofs enviable lead
HONG KONG (Reuters Breakingviews) - The world's largest battery maker is determined to shore up its dominance. A planned Hong Kong listing, for China's Contemporary Amperex Technology could raise up to $5 billion, according to IFR. The share sale would fund factories abroad. It would also insulate its war chest from global foreign exchange ructions.
Robin Zeng is in a strong position. Earnings at the $150 billion company he founded are accelerating faster than its investments, according to forecasts gathered by Visible Alpha. While capital expenditure may swell from $4.3 billion in 2024 to nearly $6 billion in 2028, CATL's net cash could nearly triple to roughly $60 billion over the same period, per analyst estimates.
However, while much of that wealth remains in mainland China, where it is subject to stringent capital controls, CATL’s next big steps will be overseas. The U.S. Defense Department's move on Monday to add the group to a list of entities it says work with China’s military jeopardises deals it has struck to license its technology to Ford Motor and Tesla as well as other opportunities in the country. But CATL has committed to a $7.6 billion plant in Hungary, a $4.2 billion joint venture with Stellantis in Spain, a partnership in Indonesia, and a new R&D hub in Hong Kong. The battery maker has also weighed up investment opportunities from Thailand to Mexico, according to Reuters and Bloomberg.
To support its vast ambitions, the group tried repeatedly to raise equity abroad to supplement offshore debt. Two years ago, it explored issuing global depositary receipts in Switzerland, only to face regulatory concerns. A weak market frustrated a Hong Kong listing in early 2024.
The table shows CATL plans to invest more than $20 billion in battery-making facilities outside of its home market, China, according to statements from the company, media reports, and analyst research.
Success this time could limit CATL’s exposure to a weakening yuan: analysts polled by LSEG think the currency could fall as much as 10% against the U.S. dollar this year, doubtless driven at least in part by incoming President Donald Trump's tariff threats. Meanwhile, the company’s Shenzhen-listed A-shares have rallied 65% over the past 12 months, which will reduce the dilution from issuing new stock.
With fresh funds, Zeng can push hard on new products to expand CATL’s role in the global supply chain. One idea is to offer carmakers an integrated chassis, that includes a built-in battery and power system - that is, almost everything but the vehicle’s outer shell and software. CATL may not exactly need another $5 billion, but Zeng will have no problem working out how to spend it.
Chinese battery manufacturer Contemporary Amperex Technology is seeking a listing in Hong Kong, the company said on Dec. 26, in a Shenzhen Stock Exchange filing.
CATL's board has approved the plan, but the proposal is pending approval from regulators, including the China Securities Regulatory Commission, the company said.
The listing could raise around $5 billion, IFR reported on Dec. 30, citing sources.
