Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
China’s electric vehicle champion BYD said on Tuesday it had raised $5.6bn in the biggest share sale in Hong Kong in four years and the largest equity follow-on offering in the global automotive sector in a decade.
The Warren Buffett-backed company sold 129.8mn shares at HK$335.20 apiece in the deal, according to a stock exchange filing, representing an 8 per cent discount to its Monday closing price, The share offering had been increased from 118mn, according to term sheet details seen by the Financial Times.
Its Hong Kong-listed shares fell nearly 7 per cent on Tuesday, but they are still up by more than 30 per cent so far this year.
The offering reflected Tesla’s main rival’s growing hunger for funds to fuel its overseas expansion and the trend this year of share sales by mainland-listed companies in the city that marks a recovery in market sentiment and investor interest in H shares — those of Chinese mainland companies listed in Hong Kong.
“BYD has a lot of free cash flow and net cash in China, but it costs a lot to transmit the [renminbi] into the currency outside China,” Citi analysts wrote in a research note. “[It] also lacks flexibility to get regular approvals during the initial overseas capital expenditure cycle fulfilment period.”
The share placing will strengthen BYD’s “capacity to further advance its technological capabilities and accelerate its overseas expansion”, the company said in the filing.
Shenzhen-based BYD has been making an aggressive push into major markets across the globe, with plans to build localised production lines in Hungary, Turkey and Brazil under way.
China’s foreign investment curbs have prompted some homegrown companies with international ambitions to seek offshore H-share issues. The world’s largest EV battery maker CATL and China’s biggest vehicle exporter Chery both filed for a Hong Kong listing last month.
BYD’s share sale was the biggest in Hong Kong since food-delivery platform Meituan raised $10bn in 2021. Goldman Sachs, UBS and Citic were the deal’s overall coordinators.
The transaction attracted long-only funds, sovereign wealth funds and the United Arab Emirates-based Al-Futtaim family office as a strategic investor, with the order book covered multiple times, the group said. The Al-Futtaim group distributes BYD cars in the UAE and Saudi Arabia.
European and Middle Eastern funds were heavily involved in the deal, according to one person familiar with the transaction. Middle Eastern investors have been playing an increasingly important role in China’s fast-growing vehicle sector. In late 2023, New York-listed EV maker Nio secured $2.2bn from CYVN, an Abu Dhabi investment group, following a $1bn injection from the same investor earlier that year. Around the same time, Pony.ai, a Chinese self-driving start-up listed on Nasdaq, scored $100mn from Saudi Arabia’s Neom.
In China, BYD’s cars account for about one-third of all new EVs sold, including pure battery cars and plug-in hybrids. Last year, the company sold 433,000 vehicles in overseas markets, accounting for more than 10 per cent of its total sales volume.
