By Niket Nishant, Echo Wang and Sarah Wu
(Reuters) -Shares of Zeekr Intelligent Technology were indicated to open up to 29% above their initial public offering price on Friday, giving the China-based electric-vehicle maker a potential fully diluted valuation of $7.2 billion.
The debut would mark the first major U.S. listing by a Chinese company since 2021 amid fierce competition in China between electric-vehicle makers that have hurt their profits – and as many push to expand into other markets.
“The capital markets in New York are very favorable for new energy vehicles. Zeekr is a global brand, and choosing to list in New York further demonstrates its global capabilities,” said CEO Conghui An, who is also the president of Zeekr’s parent company, Geely Holding Group.
Zeekr is the premium brand of the Chinese automaker, which also owns Sweden’s Volvo (OTC:) Cars and the UK’s Lotus. It was formed in 2021 to tap into growing Chinese demand for premium models, and has delivered nearly 200,000 cars so far, according to its IPO filing, mostly in China.
Zeekr is one of a number of Chinese automakers, including BYD (SZ:), SAIC and Great Wall Motor that are targeting Europe, rolling out electric models as they seek to compete with legacy European automakers on their turf. Chinese EV sales in Europe have soared in recent years.
An said Geely aspires to become the Volkswagen (ETR:) Group of this era of new energy vehicles, comparing the company to Europe’s top automaker.
Within Geely, Zeekr’s mission is to address the luxury EV market segment, according to An.
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The stock debut comes as U.S. President Joe Biden gears up to announce new tariffs targeting China EVs, Reuters reported. The measures could also include other strategic sectors such as semiconductors and solar equipment.
At 11.27 a.m. ET, Zeekr’s stock was indicated to open between $26.50 and $27.50, compared with its IPO price of $21.
Shares of EV companies in the United States have lost substantial value in recent months, including Tesla (NASDAQ:), the leading U.S. EV maker, which has dropped 30% this year.
Rivian (NASDAQ:) Automotive has lost 85% since its IPO in November 2021, while Lucid Group (NASDAQ:) is left with a fourth of what it fetched when it signed a deal with a blank-check firm earlier that year.
IPO UPSIZED
Zeekr, however, upsized its IPO, indicating strong demand from investors. It sold 21 million American depositary shares (ADSs) to raise $441 million. It had earlier planned to sell 17.5 million ADSs at a price between $18 and $21 apiece.
Since the start of the year, the company’s deliveries have overtaken its nearest competitors.
Zeekr delivered 49,148 vehicles in the first four months ended April 30, while Xpeng (NYSE:) delivered 31,214 units and Nio (NYSE:) delivered 45,673 cars during the same period, according to regulatory filings and press releases.
The share flotation comes during rising tension between the world’s two biggest economies over trade, intellectual property, Taiwan and China’s stance on the Russia-Ukraine war.
The IPO gives Zeekr a fully diluted valuation, which includes securities such as options and restricted stock units, of $5.5 billion at the high end of its targeted range, but still lower than the $13 billion it fetched after a funding round last year.
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The discount to last year’s valuation could help draw in investors, said Dan Coatsworth, investment analyst at AJ Bell.
“They’re able to buy into a growing business at a fraction of last year’s valuation. Everyone loves a perceived bargain.”
The number of Chinese companies that have pursued stock market flotations in the United States in the past few years has dropped, after Chinese ride-hailing giant Didi Global was forced to delist its shares following a backlash from Chinese regulators.
Beijing has since softened its stance and released a set of rules last year to revive such listings, after the U.S. accounting watchdog and China resolved a longstanding audit dispute in December 2022.
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