Evergrande’s electric car unit kicks off Star Market listing process, hires Haitong Securities for pre-listing tutoring

Company’s stated plan to sell 1.556 billion shares on Star Market could see it raise around HK$36.4 billion (US$4.7 billion) based on Tuesday’s closing price

The pre-listing tutoring procedure is mandatory for every listing applicant, which can take between three and 12 months

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The production line of China Evergrande New Energy Vehicle Group’s Nevs 93, its first electric car. Photo: Handout

Published: 6:15pm, 20 Oct 2020Updated: 8:42pm, 20 Oct 2020

China Evergrande New Energy Vehicle Group, the carmaking arm of the world’s most indebted developer, has started preparing for a mainland share sale to fund its expansion and production capabilities in the world’s largest car market.

The Hong Kong-listed company said in an exchange filing on Monday evening that it has hired Haitong Securities to conduct the so-called pre-listing tutoring procedure, under which senior executives of Evergrande New Energy will be trained on how to prepare offer documents in accordance with listing rules.

Pre-listing tutoring is a compulsory procedure that every initial public offering applicant must go through before filing their listing plan to regulators, which can take between three and 12 months.

The company had said last month that it planned to offer 1.556 billion shares. Based on Evergrande New Energy’s closing share price of HK$23.4 on Tuesday, which rose 9.6 per cent on the back of the announcement, the company could net fresh capital in the region of HK$36.4 billion (US$4.7 billion) on Shanghai’s Star Market.

Visitors wearing face masks look at a Geely Preface at the Auto China show, in Beijing last month. Geely is looking to raise funds on Shanghai’s Star Market. Photo: Reuters

Its parent China Evergrande, the mainland’s largest developer, had 835.5 billion yuan (US$125 billion) of outstanding loans as of June 30, up from about 800 billion yuan at the end of 2019, according to its latest interim report. Some 47.4 per cent of them mature within 12 months.

Evergrande New Energy is the latest carmaker to pursue fundraising on the Nasdaq-style Star Market, following on the heels of Geely Automobile Holdings, China’s largest private carmaker and the owner of Sweden’s Volvo Cars, and electric vehicle start-up WM Motor Technology.