Chinese Lithium Giant Tests Investor Demand for Hong Kong IPO
HONG KONG — One of China’s top lithium producers began marketing what is expected to be Hong Kong’s largest initial public offering so far this year, braving recent market volatility to test global investor appetite for shares of new-energy companies.
Tianqi Lithium Corp.
is aiming to raise more than $ 1 billion in a listing on Hong Kong’s stock exchange, according to people familiar with the matter. The Chengdu, China-based company, which says it is one of the world’s largest producers of battery-grade lithium compounds, has been listed in Shenzhen since 2010. Its mainland shares have doubled in value over the past 12 months, giving it a market. capitalization of around $ 26 billion, according to FactSet.
Tianqi Lithium is trying to pull off a large fundraising at a time when global demand for IPOs has been depressed. Surging US inflation, rapidly rising interest rates, Russia’s invasion of Ukraine and uncertainty about the global economic outlook have helped fuel a global stock selloff, which has driven new stock-issuance volumes lower.
Hong Kong’s market has been hit particularly hard; in the year-to-date period, companies have raised a total of $ 2.4 billion in new and secondary stock listings in the city, down more than 90% in value from the same period a year earlier, according to Dealogic data.
Tianqi Lithium, which has been in business for around 30 years, makes lithium compounds and derivatives in China and owns and mines lithium minerals in Australia, according to its prospectus. The metal is used in rechargeable batteries and has been in demand for electric-vehicle production. It is also used to make glass, ceramics and other types of derivative products.
The company previously applied to list in Hong Kong in 2018 and had aimed to raise a similar amount at the time to help pay for a minority stake that it bought that year in a Chile-based lithium production and distribution company known as SQM. The IPO ended up being shelved, even though it received a green light from the China Securities Regulatory Commission.
The proceeds from the coming share sale in Hong Kong would be used to repay debt that Tianqi Lithium still has from that $ 4 billion Chilean mining deal, as well as to fund the construction of a lithium carbonate manufacturing plant in the Anju district of China’s Sichuan province .
The Shenzhen-listed shares of Tianqi Lithium and one of its main rivals, Ganfeng Lithium Co.
have significantly outperformed the broader Chinese stock market over the last two years, thanks in part to surging demand for the compounds they produce.
Tianqi Lithium’s revenue more than doubled to the equivalent of $ 1.13 billion in 2021 and the company reported a profit of $ 626 million, swinging from a year-earlier loss of $ 167 million.
—Coo Li contributed to this article.
Write to Dave Sebastian at [email protected]
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