Luxury Electric Vehicle Maker Zeekr's IPO Raises $441 Million in the US
Shares in Zeekr Intelligent Technology Holding, a luxury electric vehicle brand owned by Zhejiang Geely Holding Group, soared by 35% during its US IPO on Friday. The company raised $441 million from the sale of 21 million American depositary shares (ADS), with an option for underwriters to purchase an additional 3.15 million ADS. This IPO marks the largest US listing by a China-based company since 2021 and is the biggest since Didi Global's $4.4 billion IPO in 2021, which was followed by a Chinese regulatory crackdown. Zeekr's valuation had dropped to $13 billion in early 2023, but the IPO now gives the company a value of about $6.9 billion. Zeekr's founder and Chairman, Li Shufu, will retain approximately 75% of the shareholder voting power after the IPO.
Key Takeaways
- Zeekr Intelligent Technology Holding Ltd., Geely's high-end electric car brand, raised $441 million in its US IPO, with shares soaring 35%.
- This is the largest US listing by a China-based company since 2021, and the biggest since Didi's $4.4 billion IPO in 2021.
- Zeekr's post-IPO valuation stands at $6.9 billion, after its ADS closed at $28.26 in New York.
- Overcapacity in the domestic market and regulatory concerns are driving Zeekr to boost sales overseas, as it seeks to compete with the likes of BYD.
- Zeekr's founder and Chairman, Li Shufu, will hold about 75% of the shareholder voting power after the IPO, maintaining control over an automotive empire that includes other publicly traded EV makers and Volvo Car.
Analysis
Zeekr's successful IPO, raising $441 million, indicates renewed investor confidence in China-based EV manufacturers despite past regulatory crackdowns. This listing signifies a shift in Zeekr's strategy to tackle overcapacity and regulatory concerns in the domestic market, aiming to expand overseas and rival industry leaders like BYD. Consequences include increased financial resources for Zeekr to fund research, development, and marketing efforts. Li Shufu's voting power majority maintains his control over the automotive empire, including other publicly traded EV makers and Volvo Car. In the short term, this IPO may encourage other China-based companies to seek US listings. However, potential regulatory risks and geopolitical tensions between the US and China could pose long-term challenges for Zeekr and similar companies. Investors should carefully weigh these factors in their decision-making.
Did You Know?
- American Depositary Shares (ADS): A type of equity share that is purchased by an investor in the US and represents a specified number of shares in a foreign corporation. In Zeekr's case, each ADS represents one Class A ordinary share.
- Overcapacity in the domestic market: Refers to a situation where the supply of a product (in this case, electric vehicles) exceeds the demand in a specific market (China's domestic market). This leads to fierce competition, lower prices, and reduced profitability for manufacturers. Zeekr is aiming to expand overseas to counteract this issue.
- Li Shufu's shareholder voting power: Li Shufu, Zeekr's founder and Chairman, will retain approximately 75% of the shareholder voting power after the IPO. This means he will have significant control over the company's decision-making process and its automotive empire, which includes other publicly traded EV makers and Volvo Car.