China’s No 2 carmaker Chery seeks US$1.2 billion in Hong Kong IPO
News Summary
Chery Automobile, China's second-largest carmaker, aims to raise up to HK$9.14 billion (US$1.2 billion) through a Hong Kong initial public offering (IPO). The IPO involves offering 297.4 million shares priced between HK$27.75 and HK$30.75, with the final price to be set on September 23. Approximately 10% of the H-share offering is allocated to the public, with the remainder reserved for institutional investors. Subscriptions are open from September 18 to 22, and trading is expected to commence on September 25. Chery's listing coincides with renewed global investor interest in the Chinese electric vehicle (EV) supply chain, following strong performances by EV battery producer Contemporary Amperex Technology (CATL) and lidar sensor supplier Hesai Group in their recent Hong Kong IPOs. Chery acknowledges that US-China trade tensions and intense competition in both domestic and overseas markets could impact its financial performance and business expansion. The company anticipates strong annual growth in sales across emerging markets including South America, the Middle East, North Africa, and Asia (excluding China) between 2025 and 2030.
Background
Chery Automobile is China's second-largest carmaker by volume, and was ranked second in sales among Chinese domestic car companies in both 2023 and 2024. This initial public offering (IPO) takes place against a backdrop of elevated investor sentiment towards China's electric vehicle (EV) supply chain. Hong Kong, as an international financial hub, has long served as a crucial platform for mainland Chinese companies seeking overseas capital, with its appeal further heightened by increasing US-China trade and geopolitical tensions that make US listings subject to greater scrutiny and uncertainty. Recent successful IPOs by competitive Chinese EV-related firms in Hong Kong, such as EV battery giant Contemporary Amperex Technology (CATL) and lidar sensor leader Hesai Group, have created a positive market environment for Chery's listing. Chery's move to list in Hong Kong aligns with a broader trend of Chinese companies leveraging the city's capital markets for international expansion.
In-Depth AI Insights
What strategic implications does Chery's Hong Kong IPO, amidst US-China tensions, signal for Chinese automakers' global expansion and fundraising strategies? - In the current geopolitical climate, Hong Kong offers a crucial alternative offshore fundraising hub for Chinese companies to mitigate potential risks from US capital markets, reducing reliance on US listings and thus lowering regulatory scrutiny and delisting risks. - By listing in Hong Kong, Chery can continue to attract global capital, particularly from Asian and Middle Eastern investors, supporting its expansion strategies in emerging markets while potentially easing resistance to direct entry into markets influenced by US policies. - This move reflects a broader trend of Chinese enterprises actively building more decentralized and multipolar fundraising networks to navigate uncertainties as they pursue international development. How might Chery's stated growth in emerging markets (2025-2030) be impacted by current global economic uncertainties and the Trump administration's "America First" policies potentially influencing trade blocs? - Chery's focus on emerging markets is a strategic move to circumvent rising protectionism and geopolitical friction in Western markets, though it will face intense competition from other international brands and local emerging players in these regions. - "America First" policies could lead to fragmentation of the global trade landscape, fostering regional trade blocs. This might create new opportunities for Chery in some markets but potentially higher trade barriers or localization requirements in others. - The company's success in emerging markets will highly depend on its ability to adapt to local consumer preferences, establish robust distribution networks, and effectively manage local supply chain and compliance risks, beyond just product competitiveness. Given the recent strong performance of other Chinese EV supply chain IPOs, what are the underlying investor assumptions about the sustainability of this enthusiasm, particularly for a traditional automaker like Chery transitioning to EVs? - Investors likely assume continued strong policy support from the Chinese government for the EV sector, providing a structural growth advantage, and view China's technological innovation and cost control capabilities as significant global automotive market strengths. - Market perception of traditional automakers transitioning to EVs can be complex, acknowledging their existing scale, manufacturing experience, and brand foundation, but also raising concerns about their speed of transformation and integration of new and old businesses. Chery needs to clearly demonstrate its leadership in EV technology, product lines, and market strategies. - The sustained IPO enthusiasm may reflect long-term confidence in China's global leadership in the EV industry, but also carries the risk of short-term valuation bubbles, especially if macroeconomic headwinds or intensified industry competition lead to slower-than-expected growth.