Chinese nickel producer and trader Ningbo Lygend Resources & Technology Co., 2245.HK, plans to raise as much as $593 million in a Hong Kong initial public offering. After a lackluster IPO this year, Ligen Resources becomes the latest company in the electric vehicle supply chain to tap public markets to raise money.
The Ningbo, China-based company said on Monday that it was accepting subscriptions from investors until Thursday and expected to be listed for trading on Dec. 1. Legion Resources said its IPO guide price range is HK$15.60 (about US$1.99) to HK$19.96. About 90% of the 232.5 million shares offered in the offering are available to international investors, the company said.
Asian electric vehicle makers and their suppliers have increasingly turned to capital markets this year to raise funds in a volatile market to capitalize on a surge in demand for fuel-efficient vehicles. These businesses tend to be capital-intensive and have few options when it comes to financing.
Lygend Resources is trying to expand its capacity to produce nickel-cobalt compounds for electric vehicle batteries. The company plans to use more than half of the proceeds from the IPO for the development and construction of a nickel product production project in Indonesia's Obi Island, which is located in the Moluccas in eastern Indonesia. Lygend said it was also studying a possible minority investment in an Indonesian nickel mine.
Companies related to electric vehicles are trying to scale up and gain a deeper foothold in China's large and increasingly crowded auto market. Lygend, which generates most of its revenue from mainland Chinese customers, will join EV battery supplier CALB Co., Ltd. (3931.HK) and battery-grade lithium The list includes Tianqi Lithium Corporation, a compound maker that listed in Hong Kong this year.
The stainless steel industry still generates most of Lygen's trading and production revenue, although the share of such revenue generated by the electric vehicle unit jumped to 43 percent in the first half of this year from 3.7 percent a year earlier. The company's profit soared to 2.29 billion yuan ($321.6 million) in the six months ended June 30 from 89 million yuan a year earlier, as revenue more than doubled to 9.98 billion yuan Yuan.
Lygend also plans to use some of the proceeds from the IPO to increase capital in Ningbo Contemporary Brunp Lygend Co., a partnership between Lygend and Chinese battery giant Contemporary Amperex. Technology Ltd, 300750.SZ, referred to as Ningde Times) is a joint venture company, focusing on the development of electric vehicle battery projects.
This year, high inflation, rising interest rates and Russia's invasion of Ukraine have rattled markets and contributed to a decline in global IPO trading. Primary and secondary listings in Hong Kong have raised $11.1 billion this year, down 71 percent from a year earlier, according to Dealogic.
Chinese state-owned entities have backed IPOs in Hong Kong this year, for example by participating as cornerstone investors. Five cornerstone investors, including a Chinese state fund and a state-owned enterprise affiliated with the Ningbo municipal government, have agreed to subscribe for HK$2.55 billion in shares in Lygend and hold them for at least six months. According to the low end of the above guide price range, the number of shares subscribed by these fundamental investors will account for about 70% of the shares offered.
Investors have been wary of getting involved in deals this year, with some companies having to scale back funding targets or accept lower valuations. In September, Chinese electric car maker Zhejiang Leapmotor Technology Co., Ltd. (9863.HK, or Leapmotor) raised $800 million in its IPO, well below the company's The previously set target of $1.5 billion.
