EV-Maker Zeekr Plans First Major Chinese IPO in US in Two Years

Electric carmaker Zeekr is planning the first major IPO in the United States by a China-based company in more than two years.

The group, known formally as Zeekr Intelligent Technology Holding, said on Friday it is looking to raise up to $367.5 million by selling 17.5 million American depositary shares (ADSs) priced between $18 and $21 each.

Zeekr is targeting a valuation of up to $5.1 billion in its initial US public offering, which will test investors’ appetite for Chinese companies amid simmering tensions between the world’s two biggest economies over trade, intellectual property and the future of Taiwan.

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In the first quarter of this year, six Chinese companies staged small IPOs, which raised $46.9 million in the US. That is a substantial fall from the $428 million raised at the same time last year, according to Dealogic data.

A longstanding regulatory dispute between the US and China, coupled with a crackdown from Beijing on some of its high-flying startups, had stalled Chinese companies from seeking US listings.

Beijing has since softened its stance and released a set of rules last year to revive such listings, after the US accounting watchdog and China resolved the audit dispute in December 2022.

Zeekr, a brand owned by Geely Auto, was last valued at $13 billion after a funding round in February last year.

Risks it flagged to investors included how the Chinese government exerted substantial influence over the conduct of its business and intense competition in China’s EV market.

Only a small number of China’s 100-200 carmakers are said to be profitable because of intense price-cutting in recent years.

Certain existing shareholders and third-party investors, including Geely, Mobileye and CATL, have indicated an interest in subscribing to up to $349 million of the ADSs being offered in the IPO.

Goldman Sachs and Morgan Stanley are among the underwriters for the IPO.

A smooth listing by Zeekr would add to the stable of publicly-listed auto companies owned by Geely, which is the parent of Volvo Cars and Polestar Automotive.

The luxury EV arm of sports car brand Lotus, jointly owned by Geely and Malaysia’s Etika Automotive, also went public earlier this year on Nasdaq in a $7 billion blank-check deal.

Chinese EV-makers gave insufficient information: EU

Meanwhile, in related EV news, the European Commission has warned three Chinese electric vehicle makers that they have not supplied sufficient information for its anti-subsidy investigation, according to two people familiar with the case.

If the Commission concludes that the provided information from sampled companies BYD, SAIC and Geely is insufficient, it could use evidence available elsewhere to compute tariffs, a move that can inflate them.

Warnings of this kind occur frequently in EU trade defence cases. Indeed, for all 10 past anti-subsidy cases against China for which measures are still in place, the Commission used such “facts available” to fill in certain gaps.

The companies have been given the right to respond to the warning, the people said.

Geely declined to comment. BYD and SAIC did not immediately respond to requests for comment late on a public holiday.

The Commission, which oversees trade policy in the 27-nation European Union, launched an investigation in October into whether battery electric vehicles manufactured in China were receiving distortive subsidies and warranted extra tariffs.

The China Chamber of Commerce for Import and Export of Machinery and Electronic Products (CCCME) said earlier this month that the investigation was stacked against Chinese manufacturers.

Among its complaints was the vast amount of information the Commission has demanded from the sampled Chinese producers.

“It cannot be precluded that the Commission may resort to what is called ‘facts available’ in trade defence parlance in order to inflate the subsidy margins,” CCCME vice president Shi Yonghong said then.

The investigation, officially launched on October 4, can last up to 13 months. The Commission can impose provisional anti-subsidy duties nine months after the start of the probe.