Chinese electric vehicle maker BYD announced on Tuesday that it raised $5.59 billion through a primary share sale, which was expanded in size, making it the largest such offering in Hong Kong in four years.
The company sold 129.8 million primary shares, increasing from the originally planned 118 million shares when the deal launched on Monday.
BYD’s Hong Kong shares opened down 8% on Tuesday, reflecting the discount at which the stock was sold in the deal. Meanwhile, the Hang Seng Index fell by 1.5%.
BYD stated that this transaction represents the largest equity follow-on offering globally in the automotive sector over the past decade.
A key investor in the share sale was the United Arab Emirates-based Al-Futtaim Family Office, and BYD mentioned that the two firms plan to form a strategic partnership. However, the company did not disclose the amount invested by the family office.
In recent years, most Chinese automakers have focused on the Middle East to boost their overseas sales, although the market is relatively small compared to the domestic Chinese market.
Leveraging its competitive lineup of affordable battery-powered vehicles, BYD has quickly become China’s largest automaker since 2022.
In 2024, over 90% of BYD’s total sales, which reached 4 million cars, occurred in China.
The company accounted for more than a third of the total sales of pure electric and plug-in hybrid vehicles in the world’s largest auto market.
BYD sold the shares at HK$335.20 ($43.11) each, which is a 7.8% discount compared to the stock’s closing price of HK$363.6 on Monday.
The shares were marketed within a price range of HK$333 to HK$345 each in the accelerated book build.
This share sale is the largest of its kind in Hong Kong since 2021, when Meituan raised $6.9 billion, according to LSEG data.
The deal reflects a growing positive sentiment in Hong Kong and China, particularly in the tech sector, following a high-level summit of tech executives led by Chinese President Xi Jinping. Additionally, Chinese policymakers have indicated increased support for the country’s private business sector.
BYD’s Hong Kong shares have risen 36.38% so far this year, while its Shenzhen-listed stock has increased by 27.4%, driven by improved sentiment in the tech sector.
The company plans to use the proceeds from the share sale to invest in research and development, expand its overseas businesses, supplement working capital, and cover general expenses.
BYD has been accelerating its expansion by adding production facilities and hiring more workers. The automaker aims to sell between 5 million and 6 million cars in 2025, which would put it on par with General Motors and Stellantis globally. As of early September, BYD reported nearly 1 million employees, surpassing the workforce of Toyota and Volkswagen AG.
In February, BYD launched 21 models of electric and plug-in hybrid vehicles, priced from $9,555, featuring its God’s Eye smart driving system to maintain competitiveness in the domestic market.
The company has also been increasing its export efforts, with Brazil emerging as its largest overseas market in 2024.
In Europe, BYD has introduced new hybrid models as its electric vehicles face an additional 17% tariff in the region.
A Citigroup analysis noted that raising funds offshore in Hong Kong would allow BYD to accelerate its international business plans.
“BYD has a lot of free cash flow and net cash domestically in China, but it’s not flexible and costs a lot to transmit the RMB from China into the currency outside China,” wrote Citi analyst Jeff Chung in a research note.
He also mentioned that the company faces challenges in obtaining regular approvals for capital spending overseas.
Goldman Sachs, UBS, and CITIC Securities led the BYD deal.
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