Markets Sep 01

Geely Auto seeks $3bn Shanghai STAR Market listing

China’s Tesla rival emboldened by surging interest in IPOs on Shanghai’s answer to Nasdaq

by Reuters
Geely Auto seeks $3 billion Shanghai STAR Market listing
The logo of Chinese carmaker Geely Auto is pictured at the second media day for the Shanghai auto show in Shanghai, China, April 17, 2019.

SHANGHAI: Geely Automobile plans to raise 20 billion yuan ($2.93bn) from a public share sale on Shanghai's Nasdaq-style STAR Market to invest in new car models and technologies, exchange filings showed on Tuesday.

China's highest-profile automaker, thanks to parent group investments in Daimler and Volvo Cars, has set its sights on bolstering its global credentials with plans to revamp factories at home and abroad using manufacturing platforms developed with Volvo Cars. 

It also aims to start European exports this year of sport-utility vehicle 01 under its premium Lynk & Co brand.

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The Hangzhou-based automaker, controlled by billionaire chairman Li Shufu, posted first-half net profit down 43% at 2.3bn yuan as sales slumped 19% to 530,446 vehicles, hit by the coronavirus pandemic. 

Geely is targeting full-year sales of about 1.32 million vehicles, down 3% from 2019, helped by a second-half recovery in demand after the easing of coronavirus lockdowns.

Under merger talks that were suspended in July, Geely's parent group had planned to merge the automaker with affiliate Volvo Cars and list the combined business in Hong Kong and possibly Stockholm.

Geely's Hong Kong-listed shares trade at 22 times trailing earnings, compared with STAR Market's average earnings multiple of 96.

Its Shanghai listing plan could also boost the company's Hong Kong-traded shares. 

Semiconductor Manufacturing International's (SMIC) Hong Kong-listed shares more than doubled in the six months ahead of its Shanghai listing on July 16.

Geely's planned listing would make it the first automaker on STAR Market. The market, with its streamlined listing process, dwarfed Shanghai's 30-year-old main bourse in the first half of 2020 to become the world's second-biggest IPO venue behind Nasdaq.

Geely has hired China International Capital Corp and Huatai United Securities as underwriters for the listing.

  • Reporting by Samuel Shen and Brenda Goh in Shanghai and Yilei Sun in Beijing

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