Auto firm Zeekr Intelligent Technology is aiming for a whopping total valuation of about USD 5.13 billion from the US initial public offering (IPO) soon. This is a commendable step as it is the first time that a China based company is listed in the public after a gap of two years.
For its IPO, Zeekr intends to raise USD 367.5 million by way of 17.5 million American depositary shares (ADSs) at a price of between USD 18 and USD 21 per share. This strategic move will be the litmus test for the investor confidence for Chinese enterprises amidst lingering trade issues, intellectual property concerns, and the geopolitical ambiance surrounding the status of Taiwan.
The scenario of Chinese companies on the IPO list has encountered a serious retreat, as only six IPOs have been made in the United States for the sum of USD 46.9 million in Q1 2024. This figure which came from Dealogic data shows the sharp difference from the USD 428 million dollars raised last year during the same period. The stalemate in regulations between the US and China, coupled with the Chinese government’s actions of shutting down its burgeoning tech sector, made listing in the US impractical.
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Nonetheless, a settlement of the audit matter took place between the US Public Company Accounting Oversight Board (PCAOB) and China in December 2022, which China explores to introduce new guidelines for the foreign listing rejuvenation.
The carmaker concluded a round of funding in February 2022 to obtain a valuation of USD 13 billion. Nevertheless, the company has been frank about the risks which its operations are laden with, putting the primary ones as significant government influence and vast competition in the Chinese EV market. Moreover, vital shareholders which include among others Geely Automobile, Mobileye, CATL, have indicated in their view to order up to USD 349 million worth of ADSs offered in the IPO.
In Zeekr’s IPO, Goldman Sachs and Morgan Stanley are top underwriters. The position of these firms among the leaders in this offering shows the weight and confidence in the offering. Arguably, Zeekr’s successful listing will not only boost the stockholders’ confidence but also improve the number of publicly traded automotive entities in the portfolio of Geely Auto, which include Volvo Cars and Polestar Automotive. This first half of the year the luxury EV spinoff of Lotus, the low-cost EV jointly operated by Geely, Malaysia’s Etika Automotive, went public on Nasdaq by a USD 7 billion blank-check merger agreement which is playing a big part in the new face of automotive investments and market trend.