CATL likely to offer less than 10pc discount for US$5 billion Hong Kong listing, sources say

Prospective investors in Chinese battery giant CATL's Hong Kong listing to raise about US$5 billion (HK$39 billion) have been told the stock may be sold at a discount of less than 10 percent to the company's Shenzhen-listed shares, according to three sources with direct knowledge of the matter.

The discount offered could be around mid-single digits, two of the sources added.

CATL is meeting investors ahead of launching the book building for the deal next week that could be the largest new share sale in Hong Kong for four years.

Investors are pushing CATL to price the Hong Kong shares at least a 10 percent discount to the Shenzhen-traded stock, one of the sources and a fourth person told Reuters.

The pricing has not been finalized, the sources said.

CATL wants to have cornerstone and anchor investors subscribe for around half the shares to be sold in the deal, two of the sources added.

The sources could not be named discussing information that has not yet been made public.

CATL did not immediately respond to a request for comment from Reuters.

CATL shares were trading 2.33 percent higher on Wednesday at 237.08 yuan (HK$254.89). However, the stock has fallen nearly 11 percent this year. China's CSI300 index was up nearly 0.5 percent.

Hong Kong shares typically trade at a discount compared to mainland stocks. Investors are usually offered stock at a cheaper price in offshore listings like this as an incentive to buy into the share offering.

Midea Group priced its Hong Kong shares at about a 20% discount when it raised US$4 billion in a listing in September last year.

The battery giant’s listing would be the largest in Hong Kong since 2021, when Kuaishou Technology raised US$6.2 billion in an initial public offering.

CATL has previously said in a regulatory filing that part of the funds raised will be used to build a 7.3 billion-euro (HK$64.38 billion) battery plant in Hungary.

REUTERS