Twenty-one million ADS at $21 each: China’s battery-powered EV makerZEEKR Intelligent Technology Holding Limited (ZK)announced early today – Friday, May 10, 2024 – that it priced its IPO – upsized at pricing to 21.0 million American Depositary Shares (ADS) – at $21.00 each – the high end of its $18.00-to-$21.00 range – to raise $441.0 million on Thursday night, May 9, 2024. The company’s announcement confirmed the pricing news – reported by Reuters in an exclusive story published online before the closing bell on Thursday, May 9, 2024. ZEEKR’s IPO marks the largest U.S. IPO by a Chinese company since 2021. (Editor’s Note: This column, published early today – Friday, May 10, 2024 – was updated at around midday to add details on ZEEKR’s debut on the NYSE.)
ZEEKR’s stock jumped to open at $26.00 – up $5.00 for a 23.8 percent gain – at midday today – Friday, May 10, 2024 – on the New York Stock Exchange. Shares of ZEEKR hit an intraday high of $29.36, touched an intraday low of $25.51 and climbed back up to trade at $27.20 – up $6.20 from the IPO price – at around 1:08 p.m. EDT. Volume was around 6.23 million shares, according to the NYSE.
Goldman Sachs (Asia) L.L.C., Morgan Stanley Asia Limited, Merrill Lynch (Asia Pacific) Limited (BofA Securities) and CICC (China International Capital Corporation) acted as the leading joint book-runners for ZEEKR’s U.S. IPO.
At pricing, the IPO’s size grew with the addition of 3.5 million ADS to a total of 21.0 million ADS – up from the number of shares – 17.5 million ADS – in the prospectus. Each ADS represents 10 ordinary shares.
The IPO’s upsizing and the high-end pricing gave ZEEKR a market cap of about $5.19 billion, not including stock options.
ZEEKR is not profitable, according to the prospectus. For the 12 months that ended Dec. 31, 2023, ZEEKR reported a net loss of $1.16 billion on revenue of $7.28 billion, according to financial statements in the prospectus.
China’s Geely Auto spun off ZEEKR in the IPO. Geely Auto, however, will still be the controlling shareholder with about 50.8 percent of the voting power of the company’s outstanding stock after the IPO, according to the prospectus.
Insider interest was strong, along with interest from third-party investors – for an aggregate total of US$349.08 million of ADS in the IPO, according to indications of interest disclosed in the prospectus:
* Geely Auto, the controlling shareholder, indicated that it was in for up to US$320.0 million, but Reuters reported that Geely Auto took only $271 million in stock, according to a person familiar with the situation, while
* Mobileye, the autonomous driving technology company that has a collaboration with ZEEKR, was in for up to US$10.0 million, and
* CATL, a Chinese manufacturer of lithium-ion batteries for EVs and a ZEEKR supplier, was in for up to US$19.08 million.
ZEEKR’s U.S. IPO comes at a challenging time of intense price competition in the EV sector and geopolitical tensions between the U.S. and China.
In August 2023, ZEEKR cut the price of its entry-level Zeekr 001 model to 269,000 yuan (US$37,180) amid China’s EV price war, according to CarNewsChina.com.
ZEEKR Intelligent Technology Holding Limited, based in Zhejiang province, is a “fast-growing BEV technology company,” the prospectus says. BEV stands for battery-powered electric vehicle. The company’s current product portfolio includes ZEEKR 001, a five-seater cross-over hatchback vehicle model introduced in April 2021; ZEEKR 009, a luxury six-seater model for families and businesses, and ZEEKR X, a compact SUV model introduced in April 2023.
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