Zeekr prices US IPO at top of range to raise USD441 million
Chinese electric vehicle maker Zeekr Intelligent Technology priced its U.S. IPO at the top of its indicated range, raising USD441 million, it said on Fri.
Zeekr, which is the premium brand of Chinese automaker Geely, upsized its IPO to sell 21 million American Depositary Shares (ADSs) at USD21 per share. It begins trading on NYSE on Fri under the ticker ZK. It had earlier planned to sell 17.5 million ADSs.
The IPO gives Zeekr a fully diluted valuation, which includes securities such as options and restricted stock units, of USD5.5 billion. On a non-diluted basis, the IPO values the company at about USD5.1 billion. This compared to Nio's market cap of about USD8.81 billion.
The company closed orders from investors a day earlier in the bookbuilding process because of strong demand, Reuters reported on Tue.
Three strategic investors accounted for USD300 million worth of stock sold in the IPO, with Zeekr's parent company Geely Automobile taking USD271 million in shares, according to a person familiar with the deal. Contemporary Amperex Technology (CATL) took USD19.1 million and Mobileye Global USD10 million, the person added.
Geely had originally said it would take up to USD320 million, in the IPO, a term sheet from the deal's launch showed.
Reuters had exclusively reported the pricing of the IPO earlier on Thu.
Even after the Zeekr deal was upsized, the value of shares sold to investors outside those strategic buyers was small compared to previous large China listings in New York.
Geely, CATL and Mobileye did not immediately respond to a request for comment.
The IPO was multiple times oversubscribed, two sources said, but analysts are not convinced there will be a rush of Chinese companies listing in New York any time soon.
"The Hong Kong market has to be revived for one to say that Hong Kong and China is back," said Sumeet Singh, Aequitas Research director who publishes on Smartkarma.
"U.S. listings would be a second step after that and probably won't take place until at least the U.S. elections are out of the way."
The strong demand for Zeekr's IPO comes against a backdrop of a fierce EV price war in China that has undercut profits, leaving a number of companies to pursue expansion outside China where they can charge more and beef up their margins.
Zeekr is one of a number of Chinese automakers, including BYD, SAIC and Great Wall Motor that have set their sights on Europe, rolling out electric models as they seek to compete with legacy European automakers on their own turf.
BYD and state-backed Chery have already announced plans to build cars in Europe.
While Zeekr successfully pulled off its U.S. flotation, its IPO valuation represents a climb-down from the USD13 billion it was valued at when it raised USD750 million from new and existing investors last year.
Zeekr delivered its first vehicle in Oct 2021. The company delivered a total of about 196,633 cars, mostly in China, as of Dec. 31.
Since the start of the year, Zeekr's deliveries have overtaken its nearest competitors. Zeekr delivered 49,148 vehicles in the first four months ended Apr 30, while Xpeng delivered 31,214 units and Nio delivered 45,673 cars during the same period, according to regulatory filings and press releases.
Zeekr's prospectus disclosed a surge in total revenue to 51.67 billion yuan (USD7.3 billion) in 2023, up from 31.9 billion a year earlier. However, its loss from operations widened to 8.18 billion yuan from 7.15 billion.
The Zeekr listing is the biggest Chinese flotation on U.S. stock exchanges since 2021 when LianBio listed its shares in New York. Last year, Zeekr had put its IPO plans on hold, Reuters previously reported.
The number of Chinese companies that have pursued stock market flotations in the U.S. in the past few years has plummeted, after Chinese ride-hailing giant Didi Global was forced to delist its shares following a backlash from Chinese regulators.
Top of list, Zeekr boasts actual vehicle sales and revenue - no mean feat for a three-year-old startup. In 2023, Zeekr delivered 118,685 premium electric vehicles. It generated USD7.28 billion in revenue, up about 62% from 2022, according to an IPO filing. The company delivered a loss of USD1.16 billion last year.
Secondly, its sales are growing while even Tesla is struggling amid a brutal price war. In Apr, Zeekr told CNBC that it is outselling the Model Y and Model 3 maker in parts of China. Deliveries totaled 49,148 in the first four months of 2024, up 111% year over year. Zeekr is targeting 230,000 EV deliveries for the full year, roughly double the 2023 tally. Its growing lineup includes the Zeekr 007 sedan, 001 SUV and 009 van.
Not least, there's the parent company: Geely. The Chinese car giant, which founded Zeekr as an EV subsidiary in Mar 2021, is trying to catch up with BYD in electric vehicles. Geely owns several car brands, including Polestar, another high-end EV startup. Both startups can lean on the auto group for resources.
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bullrider_21OP : Doing very well on its IPO.