China’s biggest private automaker, Geely, announced plans on Wednesday for a listing on China’s Nasdaq-like high-tech STAR market. The list would make it the first overseas-listed Chinese automaker to double list on mainland financial markets for fresh funds.
Why it matters: Geely’s decision comes as Beijing is stepping up capital market reforms to encourage domestic listings. It also continues a trend of overseas listed firms raising RMB war chests in preparation for hard times.
- A major listing is good news for the STAR board, which has struggled to attract the tech firms it was designed to encourage.
Details: Hong Kong-listed Geely shares were up 5.9% to HKD 12.6 ($1.63) on Thursday after the company announced its board has agreed on a preliminary proposal to sell shares publicly on Shanghai’s science and technology innovation board, better known as the STAR market.
- RMB shares to be issued will have equal conditions in value, voting rights, dividends, and return of assets with Hong Kong shares, the company said in the announcement, adding the board is currently mulling the final issue size.
- Geely is likely to enjoy a higher price in its domestic listing, analysts from China International Capital Corporation (CICC) said in a report.
- Geely’s stocks have been down on the Hong Kong Stock Exchange over the past several years, after reaching a peak of HKD 28.91 in late 2017.
- Geely has not revealed details about its plans for proceeds.
- The Chinese auto giant told investors that it will focus on developing internal combustion vehicles as electric vehicle makers suffer losses, speaking in a web conference by investment bank Jefferies earlier this month.
- But Geely told TechNode it is still making long-term investments in EVs, saying in a statement: “We believe an electrified future, and will continue to invest on it.”
Context: The owner of Volvo in May outperformed industry averages by selling 108,822 vehicles in China, a 20% growth compared with the same period last year. However, Geely’s EV business has been falling at double-digit rates over the past five months.
- Chinese traditional automakers, with bigger shares of the country’s entry-level auto market, are under pressure in the consumer EV segment, currently driven by premium demand, Cui Dongshu, secretary general at China Passenger Car Association (CPCA), told TechNode.
- Geely is doubling down on the high-end EV segment with Polestar, a new premium EV brand jointly owned by Geely and Volvo. Geely plans to deliver its first all-electric model under the Polestar brand early next month.
- Called Polestar 2, the electric sedan directly targets market leader Tesla’s locally-made Model 3 with a similar starting price of RMB 298,000 ($42,120) and driving range of 443 km (275 miles).
- China will continue support to its tech-focused stock board with the launch of a market board index and inclusion of STAR-listed companies into the Shanghai-Hong Kong Stock Connect scheme, Yi Huiman, chief of China’s top securities regulator said Thursday, according to Shanghai Daily.