Electric car maker BYD seeks up to US$3.6b from sale of its Hong Kong-listed shares

[SHANGHAI] BYD, a Chinese electric-vehicle manufacturer backed by Warren Buffett, is looking to raise as much as US$3.6 billion from a sale of its Hong Kong-listed shares, capitalising on rising demand for new-energy vehicles and a blistering stock rally.

BYD is selling 121.1 million shares at HK$222 (S$37.98) to HK$228 each, according to terms of the deal obtained by Bloomberg News. The price range represents a discount of 6.6 per cent to 9 per cent to the last closing price of HK$244.

The offering comes after BYD's shares have surged more than 400 per cent in the last 12 months in Hong Kong, part of a broader rally in EV maker stocks buoyed by strong investor expectations for the industry's growth.

BYD is the the latest in a growing line of Chinese EV makers to tap capital markets for funding. Last year, they raised billions of dollars in share sales: Chinese rival Xpeng sold US$2.5 billion worth of new stock, while Nio fetched US$3.1 billion in December. Xpeng also signed an agreement with banks for a US$2 billion line of credit earlier this year.

Electric-car demand is increasing in China, benefiting industry leader Tesla as well as its local contenders such as Nio and Xpeng that focus on their domestic market. New energy vehicle retail sales rose 9.8 per cent in 2020 to 1.11 million units, with a 58 per cent year-on-year jump in December to 206,000 units.

Shenzhen-based BYD plans to use the cash to replenish its working capital, repay interest-bearing debt, and invest in research and development, according to the terms. It said in December it planned to issue no more than 20 per cent of its total H shares outstanding. Wednesday's deal represents 11.7 per cent of its enlarged H-share base, the terms show.

BLOOMBERG