Zeekr is set to make waves as it targets a valuation of up to $5.13 billion in its upcoming U.S. initial public offering (IPO). This move marks a significant event, being the first major flotation of a China-based company in over two years. Zeekr plans to raise up to $367.5 million by offering 17.5 million American depositary shares (ADSs) priced between $18 and $21 each.
The IPO comes at a crucial time, testing investor sentiment towards Chinese companies amidst ongoing tensions between the world’s two largest economies over trade, intellectual property, and the future of Taiwan. In the first quarter of 2024, only six Chinese company IPOs in the U.S. raised $46.9 million, a sharp decline from $428 million during the same period last year, according to Dealogic data.
The IPO revival follows a recent easing of regulatory disputes between the U.S. and China. Last year, Beijing released a new set of rules to encourage such listings after the resolution of an audit dispute between the U.S. accounting watchdog and China in December 2022.
Zeekr, last valued at $13 billion after a funding round in February last year, is not without its risks, as highlighted in its investor prospectus. The company cited the substantial influence exerted by the Chinese government over its operations and the fierce competition within China’s EV market as potential challenges.
Several existing shareholders and third-party investors, including Geely Auto, Mobileye, and CATL, have expressed interest in subscribing to up to $349 million of the ADSs offered in the IPO. Goldman Sachs and Morgan Stanley are among the underwriters for the IPO.
A successful listing by Zeekr would further expand the roster of publicly traded auto companies under Geely Auto, which owns Volvo Cars and Polestar Automotive. Earlier this year, the luxury EV arm of sports car brand Lotus, jointly owned by Geely and Malaysia’s Etika Automotive, went public on Nasdaq in a $7 billion blank-check deal.
