WM Motor, a Chinese electric vehicle maker backed by search engine giant Baidu, is set to be acquired by Apollo Future Mobility, a Hong Kong-listed firm backed by Hong Kong tycoon Li Ka-shing, for about $2 billion. The acquisition means the EV maker will go public in Hong Kong via a backdoor listing.
Why it matters: The $2 billion takeover is seen as a survival move for the Chinese EV maker, once a rival of Nio, Xpeng, and Li Auto but now desperate for cash. The company has experienced significant setbacks, including sluggish sales, massive recalls, and lawsuits with Geely in the past few years.
Details: Apollo Future Mobility Group’s subsidiary Castle Riches Investments Limited will spend around $2 billion to buy 100% of WM Motor Global Investment Limited’s shares, according to a security filing (in Chinese) made on Thursday.
- Apollo also said it would sell more than HK$ 3.5 billion ($450 million) of its shares, with 20% of the proceeds to be used to repay interim financing to WM Motor and 70% to be used to fund its further development.
- WM Motor became a major shareholder in Apollo in late 2021 and held a stake of nearly 23.7% before the share sale. WM Motor founder and chief executive Freeman Shen is a non-executive director at Apollo.
- The two companies are set to complete the deal within the next three months, which could allow WM Motor to be listed on the Hong Kong Stock Exchange in the second quarter, local media outlet CLS reported.
- WM Motor Global Investment Limited owns more than 80% of the shares in WM Smart Mobility Technology (Shanghai) Co., Ltd., a major business entity of the namesake EV maker in China, the filing said.
Context: Positioning itself as a luxury EV maker with plans to launch its first model in 2024, Apollo has been chaired by Ho King-fung, previously a JP Morgan analyst and a nephew of former Macau chief executive Edmund Ho Hau-wah, since 2016.
- The company is heavily backed by political and business elites in Hong Kong and Macau, with Ho’s family holding an 11.35% stake as of March 2022, according to a Thursday report by Chinese media outlet Yicai. Hong Kong tycoon Li Ka-shing and Solina Chau Hoi Shuen, a businesswoman and close friend of Li, also own a combined 9.9% stake in the company, the report said.
- In October 2021, WM Motor said it would raise $500 million in two financing rounds, including a $300 million Series D1 led by PCCW, a telecommunication firm headed by Li’s younger son Richard. The Shanghai-based EV maker has also secured support from investors, including the city’s government funds, state-owned automaker SAIC, and Baidu.
- In June, WM Motor filed paperwork for an initial public offering in Hong Kong and was rumored to be looking to raise as much as $1 billion, according to a Bloomberg report. The company did not proceed with the initial share sale, however. The firm also had plans to list on the mainland’s Nasdaq-style Star Market back in late 2020, the South China Morning Post reported.
- Once hailed as one of the “Fab Four” in China’s EV market by Deutsche Bank analysts, WM Motor has underperformed in the past two years, reporting sales of 44,152 units in 2021, less than half those of peers Nio, Xpeng Motors, and Li Auto. That number further declined to 29,358 units from January to November 2022, according to figures from the China Passenger Car Association (CPCA).