GEELY Automobile to list shares in Shanghai
Affected by the pandemic situation and the economic recession, global automakers have fallen into the dilemma of ‘lack of money’ and GEELY is no exception. However, If GEELY can be listed on the STAR board, it will help the company to further broaden its financing channels and effectively improve the company’s financial situation.
Meanwhile, as valuations in the A-share market are usually higher than the H-share market, the IPO for GEELY in STAR board will enhance the overall market valuation and improve the quality of domestic listed company in the automotive sector.
GEELY Automobile, a Zhejiang-based automaker
GEELY Automobile Holdings Ltd.’s board has approved a preliminary proposal to list new shares on the Shanghai Stock Exchange’s Nasdaq-like STAR board.
The Zhejiang-based automaker is currently listed on the Hong Kong stock exchange with a market capitalization that exceeded HK$120 billion (US$15.48 billion) in morning trade Thursday.
Geely Automobile and sister company Volvo Cars, which parent Zhejiang Geely Holding Group Co. bought from Ford Motor Co. in 2010, are planning to merge and list in Hong Kong and possibly Stockholm — as well as on the mainland, if Geely Automobile’s latest proposal receives final approval.
Zhejiang Geely Holding Group, led by billionaire Li Shufu, has a number of other investments including owning 9.7 percent of Germany’s Daimler AG, 49.9 percent of Malaysia’s Proton, and a majority stake in British sport car brand Lotus.
Would not involve the conversion of existing shares
Geely Automobile in a filing late Wednesday said the proposed shares would be listed on the STAR board and would not involve the conversion of existing shares. It said its board will hold further talks on the size of the issue.
Funds raised will be used for “business development and general working capital of the group,” it said, without elaborating.
“We believe such proceeds are likely to be used for the Volvo merger, although Geely cannot explicitly state it before the merger approval by disinterested shareholders,” said analyst Shi Ji at Haitong International.
“It is a good way for the company to raise funds as valuations in the A-share market are usually higher than the H-share market,” Shi said, comparing mainland and Hong Kong markets.
Key figures for Geely
Geely Automobile plans to introduce six models under the Geely, Lynk&Co. and Geometry marques this year. It sold 1.36 million cars in 2019 and targets sales of around 1.4 million vehicles this year. It reported profit of 8.19 billion yuan (US$1.16 billion) last year.
About E. J. McKay
E.J.McKay is a Shanghai-headquartered investment bank with a special focus on mergers & acquisitions. We are one of the most long standing independent investment banks in China, with core business of mergers & acquisitions and financing advisory.