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Chinese lithium giant tests investor demand for Hong Kong IPO

HONG KONG – One of China’s leading lithium producers has started marketing what is expected to be Hong Kong’s biggest initial public offering so far this year, braving recent market volatility to test investors’ appetites. markets for the shares of new energy companies.

Lithium Tianqi Corp.

002466 -1.01%

aims to raise more than $1 billion in a listing on the Hong Kong stock exchange, according to people familiar with the matter. The Chengdu, China-based company, which claims to be 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, that gives it a market capitalization of about $26 billion, according to FactSet.

The company filed a revised prospectus on June 19 after passing a listing hearing in Hong Kong and earlier receiving approval from China’s securities regulator to sell shares in the Asian financial hub. It is expected to price its IPO on July 6 and begin trading on July 13, people familiar with the deal said. The final transaction size may change depending on investor demand.

Tianqi Lithium is trying to achieve a major fundraising at a time when global demand for IPOs is depressed. Soaring US inflation, rapidly rising interest rates, Russia’s invasion of Ukraine and uncertainty over the global economic outlook helped fuel a sell-off in global equities , leading to lower new share issuance volumes.

The Hong Kong market was particularly affected; year-to-date, companies have raised a total of $2.4 billion in new equity and secondary listings in the city, down more than 90% in value from the same one-year period earlier, according to Dealogic data.

Tianqi Lithium, which has been in business for about 30 years, manufactures lithium compounds and derivatives in China and owns and operates lithium minerals in Australia, according to its prospectus. The metal is used in rechargeable batteries and has been requested for the production of electric vehicles. 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 aimed to raise a similar amount at the time to help pay for a minority stake it bought that year in a production and distribution company. lithium company based in Chile, known as SQM. The IPO ended up being put on hold, even though it received the green light from the China Securities Regulatory Commission.

Proceeds from the upcoming Hong Kong share sale would be used to pay off the debt Tianqi Lithium still owes from that $4 billion Chilean mining deal, as well as fund the construction of a carbonate manufacturing plant. lithium in the Anju district of the Chinese province of Sichuan. .

The Shenzhen-listed shares of Tianqi Lithium and one of its main competitors, Ganfeng Lithium Co.

have significantly outperformed the broader Chinese stock market over the past two years, thanks in part to growing 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, compared to a loss of $167 million the previous year.

Write to Dave Sebastian at dave.sebastian@wsj.com

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Appeared in the June 21, 2022 print edition as “Chinese Lithium Producer Plans IPO”.

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