Hebei Gellec New Energy Science & Technology Co., a prominent Chinese battery manufacturer backed by electric vehicle giant BYD Co (SZ:002594), is contemplating an initial public offering (IPO) in Hong Kong in the coming year. This strategic shift in plans arises as the company diverts its attention from its initial intentions for a listing on the mainland China stock exchange.
In a noteworthy change of course, Gellec has commenced preliminary discussions with potential advisers to pave the way for a share sale that could potentially generate several hundred million dollars. The anticipated IPO is expected to confer a valuation of approximately $2 billion upon the company.
The decision to target the Hong Kong market follows Gellec’s withdrawal of its application for an A-share listing on a mainland Chinese exchange in September, where it aimed to raise 1.3 billion yuan ($178 million). Headquartered in Yongnian, Hebei province, Gellec specializes in wet-process lithium-ion battery separators, a crucial component in electric vehicle batteries.
BYD Co., holding more than a 2% stake in Gellec, has played a pivotal role in the firm’s operations, contributing over half of its revenue—691 million yuan—in the first half of the previous year. During this period, Gellec reported a net income of 130 million yuan.
Gellec’s altered trajectory aligns with broader industry challenges, including regulatory headwinds and an economic downturn that have cast a shadow over the outlook for initial public offerings (IPOs) across Asia, especially in China. The China Securities Regulatory Commission has exercised caution in approving IPOs to maintain market stability, and companies like Syngenta Group have deferred their Shanghai IPOs due to market fluctuations.