China EV Maker Leapmotor Set to Raise $800m in Hong Kong IPO

China’s Zhejiang Leapmotor Technology is set to raise $800 million in its Hong Kong initial public offering (IPO), sources say, by pricing its shares at HK$48 ($6.12) each.

That sum is less than the $1 billion the EV maker said it was aiming to raise in regulatory filings last week, but it will still be the city’s largest share offering this year.

The firm originally planned to raise $1.5 billion but cut the size after a lukewarm response from investors.

The sources spoke on condition of anonymity as the pricing information was not public. Leapmotor declined to comment.

The pricing revealed on Sunday is at the bottom of the range of HK$48 to HK$62 a share that Leapmotor has set for the 130.82-million-share deal.

Potential investors cut back their orders amid volatility in global financial markets, one source said.

In the United States, the S&P 500 dropped 4.7% last week as the Federal Reserve raised interest rates and markets remained concerned about high inflation. Hong Kong’s Hang Seng Index fell 4.4%, its worst for 10 weeks.

Leapmotor, based in Hangzhou, produces four EV models that mainly target China’s middle and lower-end mass market in a 79,500-300,000 yuan ($11,500-$43,000) price range, according to its website and prospectus filed with the Hong Kong Stock Exchange.

It plans to use the IPO funds for research and development and to boost its production capacity and sales network, according to regulatory filings.

Earlier this year, Leapmotor became a member of the nation’s elite ‘10K club’ after selling 10,059 EVs in March, a quantum leap in sales that gave energy for its IPO plans.

A 200% surge in its EV sales enabled the company to leapfrog more storied rivals like Nio, whose deliveries dipped below 10,000 for the month. Leapmotor’s total car sales in the first quarter soared 410% to 21,579.

Meanwhile, Chinese battery maker CALB is raising up to $1.7 billion in an IPO, according to a company statement, in a deal that would eclipse Leapmotor and make it the biggest new share sale in Hong Kong this year.

Hong Kong IPO volumes have fallen nearly 90% as global markets remain roiled by China regulatory uncertainty, rising interest rates, high inflation and the Russia’s war in Ukraine.

Despite the Leapmotor and CALB deals, plus China Vanke’s property services unit Onewo raising $733 million, dealmakers are cautious there will be a solid rebound in new share sales in Hong Kong and overseas before 2023.

“It feels that these IPOs are kind of one-off transactions and think the Hong Kong market is not yet fully opened up,” Shifara Samsudeen, a LightStream Research analyst who publishes on Smartkarma, said.

“Most of the deals were downsized,” she said. “There have been long gaps between a hearing approval to pre-marketing and listing, these all suggest that the market is yet to return to normalcy.”