Sunwoda Taps Hong Kong IPO for Funding to Survive China's Brutal EV Battery Price War
The company has filed for a Hong Kong IPO, seeking new funds to support development of its EV battery business
Key Takeaways:
Sunwoda is seeking funds from a Hong Kong IPO to survive China's brutal EV battery price wars that are squeezing its profits
The company's EV battery segment is losing money despite growing, as it relies on its older consumer electronics batteries to stay profitable
CATL and BYD are kings of China's electric vehicle (EV) battery market, leaving breadcrumbs for a long list of second-tier players to fight over. A life-and-death period is shaping up for that group, as a brutal price war threatens to wipe out many, a common theme in numerous emerging Chinese sectors plagued with overcapacity.
In such a challenging environment, companies are scrambling for the funds they will need to survive the building shakeout. Such capital is critical not only to keep operating, but also to keep innovating in a fast-moving sector where customers only want the latest technology.
One such player hoping to survive the shakeout is Sunwoda Electronic Co. Ltd., which aims to tap global investors for cash with a planned IPO. Last week the company filed a preliminary prospectus for the listing in Hong Kong, just weeks after first revealing its intentions.
Sunwoda hopes to capitalize on recent strong sentiment in Hong Kong's IPO market, which has heated up as a series of Chinese firms already listed on domestic A-share markets in Shanghai and Shenzhen launch secondary listings. Sunwoda would follow in the footsteps of CATL (300750.SZ; 3750.HK), which made headlines when it raised $4.6 billion in May, the largest IPO globally this year.
Sunwoda hasn't disclosed how much it plans to raise just yet. But its hiring of A-list underwriters Goldman Sachs and Citic Securities implies a sizable IPO, almost certainly worth more than $100 million, based on typical deals conducted by those two banks.
EV push
Brothers Wang Mingwang and Wang Wei founded Sunwoda in the southern boomtown of Shenzhen back in 1997, at a time when EVs were still mostly on the drawing board. Similar to EV giant BYD (1211.HK; 002594.SZ), also based in Shenzhen, Sunwoda began as a manufacturer of batteries for consumer electronics. It has since ...
