Buffett-backed EV maker BYD gets approval from Hong Kong bourse for semiconductor unit spinoff in Shenzhen

BYD is seeking to list the semiconductor business on Shenzhen Stock Exchange’s ChiNext board
Spinoff will allow more equitable assessment of business units in the group, still needs approval from Shenzhen bourse, Chinese regulators

Banking & finance

Chad Bray

Published: 10:00am, 26 Oct 2021

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BYD, the Warren Buffett-backed Chinese battery and carmaker, said it has received approval from the Hong Kong stock exchange for the proposed spin off of its semiconductor unit in mainland China.

The Shenzhen-based electric vehicle maker, controlled by billionaire co-founder Wang Chuanfu, said it received approval for a plan leading to a listing of its chipmaking unit from the Hong Kong bourse on October 22, according to a stock exchange filing on Monday.

The company still needs to meet a number of conditions before it can be implemented, including receiving approval from the Shenzhen Stock Exchange and the China Securities Regulatory Commission (CSRC), according to the filing.

The spinoff “will enable investors to appraise the strategies, risks and returns of the businesses of BYD Semiconductor and the company separately and to invest directly in the relevant businesses independently,” BYD said. That would allow a more equitable assessment of the businesses, it added.

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The plan will help BYD Semiconductor, an independent leading manufacturer of automotive-grade IGBTs, or power electronic switching devices, to expand financing channel, to enhance brand awareness and to optimize corporate governance structure, BYD said in its interim report to shareholders in August.

BYD, which counts Buffett’s Berkshire Hathaway as a shareholder, derived 48 per cent of its sales in the first six months this year from mobile handset components, assembly and other products, 43 per cent from automobiles and related products and 9 per cent from the rechargeable batteries and photovoltaic business.

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The group first announced in May a plan to list its 72.3 per cent-owned chip-making unit on ChiNext, a Nasdaq-like tech board operated by the Shenzhen bourse, with the aim of raising 2.69 billion yuan (US$421 million).

The proposed spinoff of the chip-making business in an initial public offering (IPO) in Shenzhen was accepted in June and later put on hold in August after the bourse launched an investigation into the law firm advising the deal. The bourse also suspended more than a dozen other IPO applications at the same time involving the same law firm.

BYD revived its application to list the semiconductor unit last month after filing additional paperwork with Chinese regulators, according to Gasgoo.com, a Chinese automotive business-to-business marketplace and industry news website.

This article appeared in the South China Morning Post print edition as: BYD gets nod to spin off unit

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