November 14, 2017 / 6:16 AM / a year ago

China battery giant CATL plans $2 billion IPO to fund expansion

SHANGHAI (Reuters) - Chinese battery giant Contemporary Amperex Technology Co Ltd (CATL) is planning a 13.1 billion yuan ($1.97 billion) initial public offering in Shenzhen to drive its expansion and meet soaring demand for electric car batteries.

CATL said in an prospectus it would issue 217 million new shares, or about 10 percent of its enlarged capital, using the funds to build two battery plants, including a giant 24 gigawatt hour (GWh) facility that would massively boost its output.

The IPO suggests a valuation of around $20 billion.

The Ningde-based firm’s move to list on China’s NASDAQ-style ChiNext board would give investors a potential way into a firm pegged as one of China’s electric car battery champions.

China, the world’s largest market for electric cars, is driving a seismic shift towards so-called new-energy vehicles, and wants to build a dominant domestic industry of both NEV carmakers and battery manufacturers to help drive that push.

Beijing has set strict quotas for electric and hybrid cars that comes into effect from 2019. It has an ambitious target of 2 million NEV sales by 2020 and has signaled longer-term it will phase out the sale of conventional petrol engine cars.

In the prospectus, first posted by China’s securities regulator late on Friday, CATL said it had brought in 14.9 billion yuan in sales last year, up almost threefold versus 2015. Net profits were up sharply also to 3.1 billion yuan.

The funds will help CATL boost its lithium-ion car battery output, helping hit earlier targets of 50 GWh by 2020. CATL competes with Japan’s Panasonic Corp (6752.T), South Korea’s LG Chem Ltd (051910.KS), local rival BYD (002594.SZ) and Tesla Motor Inc (TSLA.O).

CATL is also looking at potentially taking market share overseas as well, leveraging huge China demand to become competitive in markets such as the United States and Europe, that are also making shifts away from petrol engine cars.

Reporting by Adam Jourdan; Editing by Stephen Coates

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