Tesla supplier CATL defends US$9.1 billion fundraising as ‘reasonable’ on rosy EV outlook after Shenzhen exchange query

Contemporary Amperex is seeking 58.2 billion yuan (US$9.1 billion) to fund expansion in what could be the biggest onshore stock offering in 2021

Battery maker last month outbid rival Ganfeng Lithium for Canadian miner Millennial Lithium in race to bolster supply

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The office building of Contemporary Amperex Technology in Ningde, Fujian province. Photo: Getty Images

Published: 3:30pm, 19 Oct 2021Updated: 10:30am, 21 Oct 2021

Contemporary Amperex Technology said its jumbo follow-on stock offering is “reasonable” taking into account the electric-vehicle (EV) industry cycle, after the fundraising drew ire from investors and a stock exchange query.

The world’s biggest maker of lithium-ion batteries for EVs and a Tesla supplier is seeking 58.2 billion yuan (US$9.1 billion) as the stock skyrocketed in Shenzhen this year to an all-time high, turning the company into the nation’s third largest by market capitalisation.

If successful, the offering would rank as the biggest domestic equity sale this year, surpassing state-controlled China Telecom’s 54.2 billion yuan initial public offering in Shanghai in August after its delisting from New York.

“The equity financing was decided on multiple factors, such as the industry trend, the company’s financial conditions and demand for capital, which will help to expand businesses,” CATL said in a statement late on Monday in response to the exchange’s query. “Therefore, the size of the fundraising is reasonable.”

Workers check products in a Contemporary Amperex factory in Ningde in southeastern province of Fujian in September 2019. Photo: Xinhua

The company, known by its acronym CATL, had earlier said the proceeds will fund five lithium-ion battery projects for the EV industry, support technology innovation and replenish its working capital.

The stock’s 68 per cent rally this year has raised its market value to the equivalent of US$215.5 billion, trailing only those of liquor distiller Kweichow Moutai and No. 1 lender ICBC. Some investors have reduced their positions amid concerns the company is corralling more funds for more expensive acquisitions.