After the Chinese government released new rules on the sales of GDRs this February, more domestically listed Chinese suppliers for lithium batteries and battery materials are planning to undertake secondary listing on foreign stock exchanges.

Sunwoda Intends to Issue GDRs in European Stock Exchanges

On June 28, Chinese battery manufacturer Sunwoda announced that it will pursue secondary listing on the SIX Swiss Exchange and the London Stock Exchange. Furthermore, the company will issue new common A shares that are traded on domestic stock exchanges and use them as the underlying securities for the GDRs that will be offered foreign stock exchanges.

According to the related information provided by Sunwoda’s board, the company will issue no more than around 172 million of additional A shares represented by the GDRs. This amount will also not exceed 10% of the company’s total common share capital before the offering. The additional A shares include securities issued upon the exercise of any over-allotment options (if they exist).

Regarding the plan to sell GDRs on foreign stock exchanges, Sunwoda said it wants to further increase sources of foreign capital in order to have the resources to meet the development needs in both the domestic and international markets. At the same time, being listed on foreign stock exchanges will improve company’s brand recognition and corporate image worldwide. The company will be seen as a truly international entity.

Global market intelligence firm TrendForce points out that Sunwoda has been expanding its production capacity for EV power batteries since the second half of 2021. So far, it has invested around CNY 72.3 billion to set up new production facilities and enhance vertical integration.

Chinese Companies in Lithium Battery Supply Chain Are Eager to Expand Globally                                 

GDR (global depository receipt) allows for the trading of companies’ shares and securities in multiple regional stock markets. In 2019, the Shanghai-London Stock Connect was established. As a result, the shares of the companies listed on the Shanghai Stock Exchange can be traded on the London Stock Exchange via GDR. Fast-forward to February of this year, the China Securities Regulatory Commission revised the Stock Connect scheme to allow the companies listed on the Shenzhen Stock Exchange to offer GDRs on the stock exchanges located in other European countries such as Switzerland and Germany.

Also, on March 16 of this year, China’s Financial Stability and Development Committee held a special meeting to discuss the current economic situation and some of the issues in the capital market. At the conclusion of the meeting, the committee recommended that the Chinese government should continue to support domestic companies across various sectors in obtaining listing on foreign stock exchanges.

Before the expansion of the Stock Connect scheme in February, five major players in the Chinese lithium battery industry already made plans to offer GDRs on European stock exchanges. They are Gotion Hi-Tech, Shanshan Group, Keda, GEM, and Sunwoda. Four of them are targeting Switzerland for secondary listing.

Shanshan Group is currently working with Huatai Securities to get itself listed on the SIX Swiss Exchange. This March, Shanshan Group announced that it will be seeking secondary listing in order to broaden its international financing channels. This, in turn, will enable the company to further grow its business operations at home and abroad. Moreover, Shanshan Group said issuing GDRs will enhance its brand and corporate image at the international level.

Gotion Hi-Tech’s application for selling GDRs is currently being reviewed by the China Securities Regulatory Commission. According to the company, after deducting the issuance costs, the proceeds from the sales of its GDRs will be mainly used to build new facilities for the production of EV power batteries and battery materials. Some of the proceeds will also be used to supplement its working capital and meet general operating expenses. Gotion Hi-Tech, too, believes that obtaining secondary listing on a foreign stock exchange will lead to a steady expansion of its global presence.

Keda’s application for selling GDRs was just approved by the China Securities Regulatory Commission near the end of this June. Established in 1992, Keda’s portfolio encompasses lithium battery materials, ceramic materials, and construction machinery.

GEM’s applications for selling GDRs and pursuing secondary listing at the SIX Swiss Stock Exchange were approved by the China Securities Regulatory Commission this June. The company is allowed to issue no more than 478 million new A shares, which are projected to turn into 47.8 million GDRs upon conversion. GEM is now waiting for the greenlight from the Swiss regulatory authority. The proceeds from the sales of its GDRs will be used to build new overseas facilities for the the production of nickel and other materials that are used in power batteries. GEM stated that success in getting listed on the SIX Swiss Stock Exchange will be enormously beneficial with respect to the efficiency in mobilizing resources in the global capital market. This, in turn, will contribute to the company’s efforts in raising production capacity and bolstering global market share.

This article is a translation of a Chinese article written by Martin at TrendForce. It contains information that is either sourced from other news outlets or accessible in the public domain. Some Chinese names are transcribed into English using Hanyu Pinyin.