EXCLUSIVE Chinese electric vehicle maker Leapmotor postpones $1.5 billion Hong Kong IPO – sources

(L-R) The Hong Kong stock exchange flag, the Chinese national flag and the Hong Kong flag are flown outside the Hong Kong Stock Exchange in Hong Kong June 7, 2016. REUTERS/Bobby Yip/File Photo

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HONG KONG, Sept 9 (Reuters) – Chinese electric vehicle maker Zhejiang Leapmotor Technology has suspended plans to raise $1.5 billion through an initial public offering (IPO) in Hong Kong due to the lukewarm investor interest, said two sources with direct knowledge of the matter. .

Bankers and advisers had hoped a deal of the size expected by Leapmotor, which would have been Hong Kong’s biggest IPO to date in 2022, would revive the city’s waning new issue market.

Instead, the deal has been put on hold and Leapmotor is considering downsizing the deal, one of the sources said.

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The decision to put the Hong Kong IPO on hold was made after the company met with investors over the past week to gauge sentiment towards the company and its listing plans, the sources said.

A smaller IPO size would be more attractive to cautious investors and the deal could be rolled back if market conditions improve, the first source said.

Leapmotor did not respond to an emailed request for comment.

Sources could not be named as the information was not yet public.

Leapmotor produces four electric vehicle models that mainly target China’s mid-range and low-end mass market in the price range of 79,500 yuan to 300,000 yuan ($11,466.40 to $43,269.44), according to its website and its prospectus filed with the Hong Kong Stock Exchange.

Bigger electric vehicle makers such as Nio Inc (9866.HK) see themselves more as a Chinese challenger to Tesla Inc (TSLA.O), mainly producing more expensive, high-end cars.

Leapmotor was ranked 12th in sales in the first seven months among all electric vehicle manufacturers in China, with a market share of 2.3%, according to data from the China Passenger Car Association.

It was founded in 2015 in Hangzhou, capital of southeastern China’s Zhejiang province, by the country’s second-largest surveillance equipment manufacturer, Zhejiang Dahua Technology (002236.SZ) and its founders.

The company also counts investment firm Sequoia Capital China and state-owned Shanghai Electric Group Corp among its main backers.

Leapmotor had planned to use the proceeds from the IPO for research and development as well as to strengthen its production capacity and sales network.

It was not immediately clear what impact the IPO would have on its operations and growth plans.

Volatile financial market conditions caused by concerns over Chinese economic growth, the Russian-Ukrainian war, high inflation and tighter monetary conditions in major economies have rattled investor sentiment in 2022.

Hong Kong IPO volumes have fallen nearly 90% year-to-date to the lowest level in nine years.

There’s only been $2.36 billion raised so far this year, not including secondary listings from Tianqi Lithium (002466.SZ), China Tourism Group Duty Free Corp (601888.SS) and others , up from $22.2 billion for the same period of 2021, according to Refinitiv data.

($1 = 6.9333 Chinese yuan renminbi)

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Reporting by Scott Murdoch and Julie Zhu in Hong Kong; Additional reporting by Zoey Zhang in Shanghai; Editing by Muralikumar Anantharaman

Our standards: The Thomson Reuters Trust Principles.

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