Chinese battery manufacturing firm Contemporary Amperex Technology Ltd (CATL) is aiming to raise up to 20 billion yuan, or roughly around $2.86 billion, through a private placement. Documents pertaining to its nonpublic offering plan revealed that the company intends to use the additional funds to invest in five new lithium-ion battery projects, which will expand its battery capacity by 52 gigawatt-hours.
A report citing the nonpublic offering plan published last week revealed that the company intends to price its offering at around 80 percent of the average price of its stock over the previous 20 trading days in the A-share market. The private placement is currently the biggest ever launched by the company since China imposed its new refinancing rules.
Since October of last year, CATL's stock prices has managed to increase from just 70 yuan per share to a high of 169.89 yuan per share. As of last week, the company's market valuation was around 330.1 billion yuan, with the stock price trading at 149.48 yuan per share.
The private offering outlined the company's performance over the past year. The Chinese firm stated that it saw a significant 38.89 percent year-on-year increase in power battery shipment for 2019. The company also cited data from the Shenzhen-based advisory firm GGII, which estimated that CATL's market share in installed capacity of power batteries for 2019 had risen to 51.79 percent year-on-year. This was a marginal increase from its market share of 41.27 percent a year prior.
The plan further specified that CATL will only choose a maximum of 35 investors to participate in the private offering. CATL assured investors that when all of its planned lithium-ion projects are completed, it would give it a clear advantage over its competitors.
The expansion plan apparently works in conjunction with the expected increase in new energy vehicle sales in the coming decade. Industry data estimates that global sales of new energy vehicles should reach 11.5 million units by 2025 with a compound growth rate of 31.6 percent.
According to the China Association of Automobile Manufacturers, new energy vehicle sales accounted for about 4.68 percent of total vehicle sales in China last year. That number is expected to exponentially increase in the coming year, with the ratio likely to hit around 25 the percent by 2025. If the total auto sales remain stable, the market share of new energy vehicles is expected to quadruple within the next five years. Battery prices will also need to stabilize or decrease during that time for the industry to also quadruple in scale.
