Geely seeks up to 20b yuan in Shanghai's Star market listing

Shanghai

GEELY Automobile Holdings, the Chinese carmaker controlled by Volvo Cars owner Li Shufu, may raise as much as 20 billion yuan (S$4 billion) via a listing on Shanghai's Star board.

The debut would represent the first for any carmaker on the bourse, a forum for high-tech and innovative companies that started last year.

Hangzhou-based Geely, which is already listed in Hong Kong, plans to use the money to help develop new technologies and vehicle models, as well as finance mergers and acquisitions and replenish working capital, according to a sales document filed on Tuesday.

Car manufacturers around the world are weathering an industry slump caused by the coronavirus outbreak. Geely last month reported a 43 per cent drop in first-half profit after the pandemic shuttered factories and decimated demand. With the outbreak receding in China, sales have started to revive and carmakers are betting the world's largest market can help them return to growth.

Citigroup raised its target price for Geely by 20 per cent to HK$20 (S$3.50) after the company flagged a Shanghai listing in June.

The share sale should boost Geely's market value in Hong Kong ahead of a potential merger with Volvo Cars, analysts said.

In February, Geely's parent company announced plans to merge Geely Automobile with its Swedish affiliate, a move that could pave the way for the creation of China's first global carmaker. The deal would unify the bulk of Mr Li's growing stable of automotive brands and

create a company with annual revenue of more than US$40 billion.

Mr Li, who is also Daimler's largest shareholder, has championed consolidation as a way for carmakers to pool resources for initiatives like self-driving cars and electrification. He has built a global carmaking empire over the past two decades, securing stakes in European legacy brands such as Lotus as well as investing in Malaysian car company Proton.

Geely closed 4.4 per cent higher in Hong Kong, extending gains this year to 12 per cent.

China International Capital and Huatai United Securities are the lead underwriters on the Shanghai deal. BLOOMBERG