China's CATL to raise at least $4 billion in Hong Kong listing

By Scott Murdoch

May 12 (Reuters) - Chinese battery manufacturer CATL 300750.SZ aims to raise at least HK$31.01 billion ($3.99 billion) in its Hong Kong listing, according to its prospectus filed on Monday, the largest new share sale in the city this year.

The maker of batteries for electric vehicles is selling 117.9 million shares at a maximum offer price of HK$263 per share, according to filings lodged with the Hong Kong Stock Exchange.

The size of the deal could increase to about $5.3 billion if an offer size adjustment option and a so-called greenshoe option are exercised.

More than 20 cornerstone investors, led by Sinopec and Kuwait Investment Authority, have subscribed to buy about $2.62 billion worth of CATL shares, the prospectus showed.

The offer size adjustment option means the number of shares could be increased by up to 17.7 million shares to raise up to an additional HK$4.65 billion ($598.00 million). There is a greenshoe option to sell a further up to 17.7 million shares.

The shares are due to price between Tuesday and Friday, with the final price to be announced on or before May 19, the filings showed.

CATL's Hong Kong shares will be sold at a small discount to the Shenzen stock's closing price on Friday if the shares price at HK$263 each. The size of the discount will be larger if the Hong Kong share price below that level.

CATL said in its prospectus it was granted a Hong Kong Stock Exchange waiver to not publish a minimum price the shares could be sold at as it could impact the trading of its Shenzhen-listed stock.

There will be 109.1 million shares sold to institutional investors and 8.8 million shares available for Hong Kong's retail investors to bid for, the prospectus showed.

The share sale will be the largest in Hong Kong since Midea Group 0300.HK raised $4.6 billion last year.

CATL's shares will start trading on the Hong Kong Stock Exchange on May 20.

CLOSE EYE ON US-CHINA TRADE WAR

U.S. onshore investors will not be able to buy CATL shares in the Hong Kong deal, the filings showed, but many of those funds have offshore operations that would be able to participate.

The company was placed on a U.S. Defense Department list in January of Chinese companies it says work with China's military. CATL said in its prospectus it was working with the U.S. department to address the 'false designation'.

"It does not restrict us from conducting business with entities other than a small number of U.S. governmental authorities, thus is expected to have no substantial adverse impact on our business," it said.

CATL's book building comes as the U.S. and China hailed constructive talks in Geneva on the weekend towards de-escalating their trade war, but Washington's 145% tariff on Chinese goods and Beijing's 125% tariff on U.S. goods remain in place.

"Tariff policies have been rapidly evolving. Currently, we cannot accurately assess the potential impact of such policies on our business, and we will closely monitor the relevant situation," CATL's prospectus said.

CATL has previously said the impact from U.S. tariffs on the company would be minimal as that market accounts for only a small part of its business.

Its North American business has been largely restricted due to policies set by the Biden administration, which excluded Chinese batteries from an EV subsidy scheme.

CATL has been licensing its battery technology to help its U.S. clients including Ford and Tesla to build their battery plants instead of building its own while such partnerships are also often being criticized by U.S. politicians.

($1 = 7.7759 Hong Kong dollars)

($1 = 7.2364 Chinese yuan renminbi)

(1 Hong Kong dollar = 0.9306 Chinese yuan)