China EV Startup Hozon Said to Weigh $1 Billion Hong Kong IPO

(Bloomberg) -- Chinese electric vehicle startup Hozon New Energy Automobile Co. is weighing a Hong Kong initial public offering that could raise about $1 billion, according to people familiar with the matter, part of a wave of electric carmakers considering listings in the Asian financial hub.

Hozon is working with advisers on the potential first-time share sale which could happen as soon as next year, the people said, asking not to be identified as the information isn’t public. A representative for Hozon couldn’t immediately respond to requests for comment.

Separately, WM Motor Technology Co. is also targeting a Hong Kong IPO that could raise about $1 billion and come as soon as next year, a person familiar with the matter said.

IFR earlier reported WM Motor’s Hong Kong IPO plans. A representative for the Shanghai-based company declined to comment.

Details such as fundraising size and timing are preliminary and could still change, and the companies could decide not to proceed with their listing plans, the people said.

Hozon and WM would add to the growing ranks of electric vehicle companies seeking first-time share sales in Hong Kong next year. Sequoia Capital China-backed Leapmotor is working with banks on a potential $1 billion IPO in the city as soon as next year, Bloomberg News has reported.

Zhejiang-based Hozon had previously weighed a listing on Shanghai’s Nasdaq-style STAR board, as had WM Motor, Bloomberg News reported in 2020. Chinese regulators stepped up scrutiny of prospective IPO candidates’ high-tech credentials, prompting scores of companies to shelve their domestic listing plans. Guidelines published in April showed firms seeking STAR board debuts would be evaluated in terms of criteria such as research and development skills and patents.

Billionaire Zhou Hongyi’s cybersecurity firm 360 Security Technology said in a stock exchange filing last month that it planned to buy a 16.6% stake in Hozon for 2.9 billion yuan ($453 million), which would make it the second biggest shareholder. Hozon sold 7,699 vehicles in September, according to the statement. Its largest shareholder is an investment arm of Yichun, a city in Jiangxi province.

Hozon offers three models under the Nezha brand, including a sport utility vehicle, its website shows. The company is betting on rising demand for electric cars in more rural areas, offering vehicles with a starting price of under $10,000 -- less than a third of what Tesla Inc.’s most affordable sedan costs in China. 

China is the world’s largest market for electric vehicles but is also fiercely competitive. EV startups blossomed under generous government subsidies but these began to be rolled back in mid-2019, putting huge pressure on the industry.

In the past year, Chinese EV makers have raised close to $19 billion through listings and follow-on share sales, data compiled by Bloomberg show, highlighting the intense need for capital to keep building cars.

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