(Reuters) – Shares of China’s Zeekr Intelligent Technology are expected to begin trading on the New York Stock Exchange on Friday after the electric vehicle maker’s initial public offering was priced at the top end of its market range.
The debut will be the first major U.S. listing of a Chinese company since 2021 amid fierce competition in China among electric vehicle makers that has hurt their profits and many of them are looking to expand their operations outside China.
The flotation also comes amid growing tensions between the world’s two largest economies over trade, intellectual property, Taiwan and China’s position on the Russia-Ukraine war.
Well-known names in the US electric vehicle market have seen significant price declines in recent months, including Tesla (NASDAQ:), the leading US electric vehicle maker, which has fallen 30% this year.
Rivian (NASDAQ:) Automotive has lost 85% since its November 2021 IPO, while Lucid Group (NASDAQ:) is left with a quarter of what it received when it signed a blank check deal earlier that year.
Zeekr, however, has increased the size of its IPO, indicating strong demand from investors. The company sold 21 million American depositary shares (ADS) at $21 each to raise $441 million. The company previously planned to sell 17.5 million ADS at prices ranging from $18 to $21 per share.
Setting a maximum IPO price may seem strange, but it’s a logical step, says Dan Coatsworth, investment analyst at AJ Bell.
“Investors may have thought we were simply experiencing a short-term market hiccup whereby the excitement around demand for electric vehicles had died down and we were experiencing a lull before the next phase of recovery,” he said. said.
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The IPO gives Zeekr a fully diluted valuation, which includes securities such as options and restricted stock, of $5.5 billion, which is at the high end of its target range but still lower than the $13 billion it raised after the round funding last year.
A discount to last year’s valuation could also help attract investors, Coatsworth added. “They can buy a growing business for a fraction of last year’s valuation. Everyone loves a good deal.”
Zeekr is one of many Chinese automakers, including BYD (SZ:), SAIC and Great Wall Motor, that have set their sights on Europe with electric models as they seek to compete with legacy European automakers on their own turf.
The number of Chinese companies listing shares on the US stock market in the past few years has fallen after Chinese ride-hailing giant Didi Global was forced to delist its shares due to a backlash from Chinese regulators.
Beijing has since softened its stance and last year published a set of rules allowing such listings to resume after the U.S. Accounting Oversight Authority and China resolved a long-running audit dispute in December 2022.