HONG KONG, Oct 6 (Reuters Breakingviews) - Shares of China’s CALB (3931.HK), which makes lithium batteries for electric cars, debuted flat following its $1.3 billion initial public offering. Hong Kong’s largest listing of the year avoided the fate of electric-car marque Zhejiang Leapmotor Technology (9863.HK), whose shares crashed 34% when they started trading a week earlier but the latest deal benefits from better suspension.
After pricing at the bottom of the range, cornerstone investors ended up with half of CALB’s total offering. One of the company’s suppliers, Tianqi Lithium (002466.SZ), bought into the deal too, reciprocating CALB’s investment in its own Hong Kong listing back in July. Leapmotor sold a lesser one-third of its offer to cornerstones.
Beyond the deal itself, CALB enjoys strong state support. There are links between the parent of its largest pre-IPO shareholder and a U.S. sanctioned Chinese “military industrial” entity, and it received government subsidies larger than the battery maker's meagre net profit. Those connections could hamper its ability to take international market share down the road but in volatile markets, it’s useful to have friends. (By Katrina Hamlin)
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(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)
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