(Reuters) -Shares of China’s Zeekr Intelligent Technology were expected to start trading on the New York Stock Exchange on Friday, after the electric-vehicle maker’s initial public offering was priced at the top end of its marketed range.
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 outside China.
The share flotation also 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.
High-flying names in the EV space 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.
Zeekr, however, upsized its IPO, indicating strong demand from investors. It sold 21 million American depositary shares (ADSs) at $21 each to raise $441 million. It had earlier planned to sell 17.5 million ADSs at a price between $18 and $21 apiece.
Pricing the IPO at the top end might seem odd but it is a logical move, said Dan Coatsworth, investment analyst at AJ Bell.
“Investors might have taken the view that we’re just going through a short-term blip in the market whereby the hype around EV demand has died down, and we’re going through a lull before the next ‘up’ phase,” he said.
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.
The discount to last year’s valuation could also help draw in investors, Coatsworth added. “They’re able to buy into a growing business at a fraction of last year’s valuation. Everyone loves a perceived bargain.”
Zeekr is one of a number of Chinese automakers, including BYD (SZ:), SAIC and Great Wall Motor that have set their sights on Europe, rolling out electric models as they seek to compete with legacy European automakers on their own turf.
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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