Chinese electric vehicle maker Zeekr Intelligent Technology (ZK.N) has successfully priced its U.S. initial public offering (IPO) at the top of its indicated range, raising $441 million and giving the company a fully diluted valuation of $5.5 billion. The IPO, which closed orders from investors a day earlier due to strong demand, saw Zeekr sell 21 million American Depositary Shares (ADSs) at $21 per share, up from its initial plan to sell 17.5 million ADSs.
Three strategic investors accounted for a significant portion of the shares sold in the IPO, with Zeekr's parent company Geely Automobile (0175.HK) taking $271 million, Contemporary Amperex Technology (CATL) (300750.SZ) taking $19.1 million, and Mobileye Global (MBLY.O) taking $10 million, according to a person familiar with the deal. Despite the upsizing of the deal, the value of shares sold to investors outside these strategic buyers remained small compared to previous large China listings in New York.
The strong demand for Zeekr's IPO comes amidst a fierce EV price war in China that has undercut profits, prompting several companies to pursue expansion outside the country in search of higher margins. Zeekr, along with other Chinese automakers such as BYD (002594.SZ), SAIC (600104.SS), and Great Wall Motor (601633.SS), has set its sights on Europe, rolling out electric models to compete with legacy European automakers on their own turf.
While Zeekr's IPO has been successful, its valuation represents a significant decrease from the $13 billion it was valued at when it raised $750 million from new and existing investors last year. The company, which delivered its first vehicle in October 2021, has since overtaken its nearest competitors in terms of deliveries. Zeekr delivered 49,148 vehicles in the first four months of 2023, while Xpeng delivered 31,214 units and Nio delivered 45,673 cars during the same period.
Zeekr's prospectus revealed a surge in total revenue to 51.67 billion yuan ($7.3 billion) in 2023, up from 31.9 billion a year earlier. However, the company's loss from operations widened to 8.18 billion yuan from 7.15 billion. Despite this, analysts remain cautious about the prospects of a rush of Chinese companies listing in New York in the near future.
"The Hong Kong market has to be revived for one to say that Hong Kong and China is back," said Sumeet Singh, Aequitas Research director who publishes on Smartkarma. "U.S. listings would be a second step after that and probably won't take place until at least the U.S. elections are out of the way."
The Zeekr listing marks the biggest Chinese flotation on U.S. stock exchanges since 2021 when LianBio listed its shares in New York. The number of Chinese companies pursuing stock market flotations in the U.S. has plummeted in recent years, following the forced delisting of Chinese ride-hailing giant Didi Global due to a backlash from Chinese regulators.
