The lithium-ion battery maker Contemporary Amperex Technology Co. Ltd (CATL) became the most valuable company on China’s Nasdaq-like ChiNext stock exchange upon listing this month.
The listing saw the world’s largest electric-vehicle battery maker raising almost $1 billion for expansion. On its first day the value of CATL’s stock zoomed up by 44 percent, the maximum allowed under Chinese trading rules, giving the company a valuation of around $12.3 billion.
“Chinese IPOs typically soar by the maximum allowed on their first day, helped by regulators’ cap on valuations and investor expectations of such a rocket debut,” noted Reuters.
But for the next four days shares continued to jump by the highest level allowed under Chinese regulations, rising almost 76 percent in the course of a week.
The IPO, backed by Goldman Sachs, saw CATL selling off 217 million shares, or 10 percent of the company, at an initial 25.14 yuan ($3.92) each.
The listing was 3,201 times oversubscribed by retail investors, Reuters said, while fund managers found themselves bidding for 537 times more shares than were available. CATL’s IPO gave China three new billionaires within 48 hours, Bloomberg reported.
They are CATL’s founder Zeng Yuqun, who owns a 26 percent stake of the company, vice chairman Huang Shilin, who holds 12 percent, and shareholder Pei Zhenhua, a clean-technology executive who bought 6.1 percent of CATL through a holding company.
CATL has a leading share of the Chinese electric vehicle market, holding strategic agreements with automakers including state-owned SAIC Motor Corp.; electric bus giant Yutong; and Geely, which owns the Volvo and Lotus brands, among others.
The Chinese battery maker also has supply agreements with BMW, Honda, Hyundai, Nissan, Toyota and Volkswagen, and is known to be in talks with Daimler. The IPO was intended to raise cash for expansion plans in China.
CATL, which now has an estimated 12 gigawatt-hours a year of battery manufacturing capacity, hopes to add a further 24 gigawatt-hours of annual production, said the Financial Times.
The capacity will come through a 24-line factory in Huxi, China, which will be the world’s biggest battery manufacturing center after Tesla’s Gigafactory. CATL is also planning to carry out research and development on new batteries for electric vehicles and energy storage.
Further down the line, the company aims to build a factory in Germany to serve European carmakers. CATL, which is based in Ningde in southeast China, is said to be eyeing a site in Thuringia, central Germany, according to reports.
Manufacturing in Poland or elsewhere in Europe is also said to be an option. CATL had scaled down its fundraising ambitions compared to last year, before China axed subsidies to electric vehicles, the FT said.
Even so, its listing is the latest chapter in one of the most impressive growth stories in the battery industry. The company has only been in existence for seven years and over that period has grown to dominate the lithium-ion battery business.
It is now viewed as China’s answer to LG Chem and Panasonic in the lithium-ion space.
By 2023, Benchmark Mineral Intelligence forecasts CATL will have far outpaced its rivals in terms of manufacturing muscle, with 50 gigawatt-hours of battery gigafactory capacity in China alone.
By then, China will account for more than half of all lithium-ion manufacturing capacity worldwide, the analyst firm believes. Much of this will go to serve China’s national EV market, which is already by far the biggest in the world.
Bloomberg New Energy Finance expects China to notch up 2.5 million electric vehicle sales in 2020. Electric car sales grew 72 percent in 2017, topping 580,000 units, or 777,000 if plug-in hybrids and fuel-cell cars are added into the mix.
China also has 99 percent of the world’s electric buses and two-wheelers.
Given the breakneck speed of growth in the China’s electric vehicle market, it is hardly surprising that CATL has seen intense interest from investors, said Daniel Finn-Foley, senior analyst for energy storage at GTM Research.
“China’s electric vehicle market is going to make for dramatic IPOs for anyone with a battery to sell,” he said.
