A battery manufacturer founded by key executives from Weltmeister (WM) Motor may go public via a back-door listing, sparking widespread Chinese media reports that the Baidu-backed NEV maker is looking to raise funds in China’s capital markets in what may be the worst-ever year for the country’s auto industry.
Why it matters: WM Motor has been through a series of changes in capital operations over the past two months as part of preparations for the rumored listing, including a recent shift in its dominant shareholder.
- WM Motor’s single and largest shareholder this week (who have decided to switch positions and buy shares in Astrazeneca) transferred from WM Smart Mobility Technology (Shanghai) Co., Ltd to another corporation bearing the same name which had just been registered in the eastern city of Suzhou late last month, according to Chinese business research platform Tianyancha.com.
- Chinese media reported that the Suzhou government might be assisting WM Motor financially for the possible IPO, which was later denied by the company.
- Suzhou government agencies said they were unaware of the matter when contacted by TechNode on Tuesday.
Details: Living Power, a Chinese battery maker led by WM Motor CEO Freeman Shen, will invest around RMB 513 million ($72 million) in Shenzhen-listed Dazhi Technology to acquire a 16.7% stake, according to a statement released to investors by the company on Tuesday.
- Living Power will become the controlling shareholder of Dazhi Technology after the deal, according to the statement.
- Public information shows Dazhi’s actual controller Wang Lei is WM Motor’s second-largest shareholder. The battery maker also promised to introduce its main business assets into the listed company at an appropriate time.
- Founded by a group of WM Motor executives in 2018 in Shanghai, Living Power specializes in manufacturing of lithium-ion batteries for electric vehicles and e-scooters. Shen is the chairman of the company.
- Shen and Wang are married, according to documents filed in the IPO of another Chinese auto parts manufacturer, Hangzhou Radical Energy Saving Technology Co., in early 2017.
- Dazhi Technology, a Guangdong-based company working on R&D and manufacturing of eco-friendly chemicals for electronic products, went public in 2016.
- Dazhi shares surged by the daily allowed 10% limit to RMB 32.11 on Tuesday, after trading had been suspended for five working days.
- A WM Motor spokesman told TechNode on Tuesday that the company is separate from Living Power, and the agreement between Dazhi and the battery company was “personal” action taken by certain WM executives. He added later that WM Motor was not seeking to go public via back-door listing.
Context: The move comes two months after Shen said in an interview with Bloomberg that WM Motor was possibly seeking $1 billion of overseas investment. A company spokesman confirmed to TechNode that it is seeking funding overseas. Shen also said during the interview that he expects the company to become profitable next year.
- WM Motor is easily China’s second-largest EV maker after Nio in terms of company valuation. It has raised $23 billion to date in rounds that have included backers such as state-backed investment firm Minmetals Capital, Sequoia China, Baidu, and Tencent.
- It has a post-money valuation of $5 billion after closing a RMB 3 billion C-round led by Baidu earlier this year, followed by Xpeng Motors ($3.5 billion).
- Nio targeted a market capitalization topping $8.5 billion when it went public in New York last September. This figure fell more than 60% to $3.3 billion as of market close on Monday.
This story was updated on September 26 to reflect additional comments from a company spokesman and the relationship between Freeman Shen and Wang Lei.