Exclusive: Zeekr, a premium Geely electric car brand, seeks over $1 billion in U.S. IPO - sources

HONG KONG, Dec 12 (Reuters) - Zeekr, one of Chinese automaker Geely's upmarket electric car brands, has confidentially filed for a U.S. initial public offering, aiming to raise more than $1 billion, three sources with direct knowledge of the matter told Reuters.

In what would be the first major Chinese float in the United States in more than a year and a half, Zeekr is seeking a valuation of more than $10 billion, two of the sources said.

That compares with a valuation of about $9 billion in its maiden external fundraising last year.

The plans come as the brand, which competes with Tesla Inc and Chinese peer Nio Inc (9866.HK), sets its sights on marketing its 001 crossover - its first and only model - in Europe next year. In doing so, it joins a growing list of Chinese automakers looking to launch or expand sales of EVs in the region.

The expansion for Zeekr, however, highlights Geely's increasingly complex EV strategy. The automotive group led by founder Li Shufu now houses seven brands manufacturing electric vehicles, of which three are high-end brands.

A Zeekr IPO would be the first major U.S. float of a Chinese firm since Beijing tightened its grip on overseas share sales in July last year - a shift triggered by a cybersecurity probe into ride-hailing giant Didi Global on the heels of its U.S. stock market debut.

The IPO filing comes after Beijing and Washington reached a landmark auditing deal in August, sharply reducing the threat of delisting for more than 200 New York-listed Chinese companies.

Zeekr lodged its filings with U.S regulators last week and is planning to go public in New York as early as the second quarter of 2023, said two of the sources and a fourth source who also had direct knowledge of the matter.

A confidential filing allows companies to keep details from rivals longer and gives them added flexibility particularly when a timeline for an IPO is not fixed.

The sources declined to be identified as the information had not yet been made public.

A Zeekr 001 electric vehicle (EV) by Geely is seen displayed at the Zeekr booth during a media day for the Auto Shanghai show in Shanghai, China April 19, 2021. REUTERS/Aly Song/File Photo

According to two of the sources, Zeekr also considered Hong Kong as its listing venue but picked New York in the hope of achieving a higher valuation.

Geely, which handles public relations for Zeekr, declined to comment. It said in October it would spin Zeekr off but did not identify a listing venue or the likely value of an offering.

SEVEN BRANDS

A successful listing could lead to more Chinese share sales in the United States, considered to be the world's deepest pool of capital and to have a more predictable listing pace.

Only five Chinese companies have completed U.S. IPOs this year, raising a combined $162.5 million, according to Refinitiv data - a far cry from the $12.8 billion raised last year.

Zeekr was established by Geely, formally known as Zhejiang Geely Holding Group (GEELY.UL), in April 2021 to tap into increasing Chinese demand for premium EVs. It launched the 001 crossover in China later that year.

But with multiple brands selling EVs, Geely faces a complexity that larger EV makers BYD (002594.SZ) and Tesla have avoided in favor of vertical integration and an approach to manufacturing that allows them to bring costs down.

Geely's other high-end EV brands include Volvo (VOLCARb.ST), Polestar - an EV-only venture with Volvo aimed at the premium segment of the market as well as the much more expensive luxury British sports car brand Lotus.

The company also markets EVs under the Geely brand, through Smart - a venture with Mercedes Benz (MBGn.DE) and Lynk & Co - another venture with Volvo that aims to carve out a niche for EVs on a fixed-cost, subscription basis.

Zeekr sold just over 60,600 cars in the first nine months of 2022 which compares with roughly 285,900 Model Y crossovers for Tesla in China in the same period, according to the China Passenger Car Association.

The 001 model starts at 299,000 yuan in China, slightly more than the 288,000 yuan for Tesla's Model Y which had a recent price cut. Zeekr has not announced pricing for overseas markets.

Reporting by Julie Zhu and Kane Wu in Hong Kong and Scott Murdoch in Sydney; Additional reporting by Kevin Krolicki in Singapore and Norihiko Shirouzu in Beijing; Editing by Edwina Gibbs

Our Standards: The Thomson Reuters Trust Principles.

Thomson Reuters

Scott Murdoch has been a journalist for more than two decades working for Thomson Reuters and News Corp in Australia. He has specialised in financial journalism for most of his career and covers equity and debt capital markets across Asia and Australian M&A. He is based in Sydney.