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Tianqi Lithium raises $1.7bn in biggest Hong Kong IPO of 2022

Tianqi Lithium, a Chinese supplier of key components in rechargeable batteries, has priced its Hong Kong share offer near the top of an expected range to raise about $1.7bn, in the city’s biggest listing this year.

The secondary listing for the Chengdu-based company, which already trades on the Shenzhen bourse, marks the first listing to raise more than $1bn in Hong Kong this year after a regulatory crackdown on China’s tech sector throttled deal flow in the first half.

The company sold 164mn shares at roughly HK$82 ($10.45) apiece, pricing at the top of an expected range, according to people familiar with the deal. Cornerstone investors included LG Chem, South Korea’s largest diversified chemical company, and the state-owned China Aviation Lithium Battery Co, a supplier for homegrown electric carmakers such as Xpeng and Geely.

Tianqi Lithium’s share sale was oversubscribed as books closed, the people said, adding that the majority of orders had come from cornerstone investors.

The listing is the biggest in Hong Kong this year, roughly tripling the $544mn secondary float in January of JL Mag Rare-Earth, according to data from Dealogic.

“Supply exceeded demand for most of the past two decades in the lithium industry, but that dynamic flipped in 2021 with gaining popularity over electric vehicles.” said Jiang Weiping, chair of Tianqi Lithium, at a press conference last week, “We think it will be a far-reaching and long-term development.”

Tianqi’s secondary listing is part of the latest fundraising rush of Chinese electric vehicle battery and material companies as the country bolsters its dominance over global clean tech supply chains.

Still, Tianqi Lithium’s offering priced the company’s Hong Kong shares at a roughly 50 per cent discount to those in Shenzhen, highlighting what brokers described as a lack of enthusiasm among local investors for the secondary listing.

“It’s nothing new,” said Louis Tse, managing director of Hong Kong-based brokerage Wealthy Securities. “We know what’s there, it’s been listed in China for quite some time now.”

Analysts said their expectations for Tianqi Lithium’s trading debut, scheduled for July 13, were muted in light of the poor performance of most Hong Kong IPOs this year.

“I don’t have a very bullish point of view on this one, even though I really like electric vehicle-related stocks,” said Dickie Wong, head of research at Kingston Securities. “Hong Kong’s stock market lacks the momentum of two years ago.”

New share offers in Hong Kong raised just $2.4bn in the first half, reflecting a drop of about 90 per cent from a year ago, and Wong said more than 80 per cent of companies that had listed in the city this year were now trading below their IPO price. He added: “It’s just very bad.”

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