Zeekr, an electric vehicle brand of Chinese billionaire Eric Li’s Geely Automobile Holdings, raised $441 million in an upsized initial public offering in the U.S., but the deal valued the company at only $5.5 billion, an almost 60% fall from early 2023.
The automaker had been expected to sell 17.5 million American Depositary Shares (ADS) in a range of $18 to $21 each. Instead, Zeekr expanded the offering to sell 21 million ADS Thursday at $21 per share, which valued the company at $5.5 billion, according to media reports and a person with knowledge of the matter.
The company, which officially lists in New York on May 10, has completed one of the largest listings by a Chinese firm in U.S. markets in recent years. As tensions between the world’s two largest economies remain high, the number and sizes of deals from China have fallen.
In the first quarter of this year, Chinese companies raised a paltry $46.9 million through both primary and secondary listings in the U.S., down 90% from $428.4 million raised in the same period a year earlier, according to analytics and data firm Dealogic. Mega deals—such as the $25 billion IPO of Chinese e-commerce behemoth Alibaba in New York in 2014—have all but vanished.
Now seeking to attract more foreign investment and bolster the country’s economy, Chinese officials have shifted their tone and become more encouraging of listings on bourses outside mainland China. A number of the country’s technology firms—such as autonomous driving startup Pony.ai and edtech company Zuoyebang—are reportedly pursuing U.S. IPOs.
Zeekr’s IPO comes as foreign investors start to take profit and retreat from markets like Japan and become more interested in China due to the country’s economic recovery.
But Zeekr faces challenges, says Wang Hanyang, a Shanghai-based analyst at research firm 86Research. The company raised $750 million in early 2023 from investors including battery maker Contemporary Amperex Technology (CATL), which valued it at $13 billion. But since then, consumer preferences have shifted.
They are now in favor of family-friendly EVs, which offer more spacious interiors and come with features such as small-sized refrigerators and in-car beds to appeal to families. Zeekr is a relatively high-end brand offering sports car-like features.
This has left Zeekr in an uncomfortable middle position, Wang says. It sells five pure electric models, a mix of sedans and SUVs, in a range of 200,000 yuan ($27,679) to almost 800,000 yuan.
Last year, the company reported $7.3 billion in sales, up more than 60% from 2022, although losses widened to $1.2 billion, according to its IPO prospectus. The automaker wants to double 2024 deliveries to 230,000 units from 118,000 vehicles in 2023, in part by entering foreign markets including Europe, a senior executive said earlier this year.
In the prospectus, it highlighted the U.S. as a potential market, although the Biden administration reportedly is poised to announce new tariffs on products from China that include batteries, EVs and solar cells as soon as next week.
“We intend to carry out our global strategies and expand our market presence by exploring overseas market opportunity, such as the robotaxi market in the United States,” Zeekr wrote. “We also plan to expand our sales network by cooperating with Geely Group’s various brands by leveraging their extensive existing overseas sales and distribution network.”
