Buffett-Backed BYD Sells $3.9 Billion of Shares as EV Stocks Electrify
21 January 2021 - 7:01PM
Dow Jones News
By Joanne Chiu
BYD Co., a Chinese car maker backed by Warren Buffett, raised
$3.9 billion from a stock sale, joining peers in capitalizing on
investors' bullishness about new-energy vehicles.
The deal marks BYD's biggest equity financing since it listed in
Hong Kong in 2002. The company, whose stock also trades in
Shenzhen, makes electric cars, batteries, plug-in hybrids and
fossil-fuel-powered vehicles.
Investor enthusiasm about green cars and breakthroughs in
battery technology have sent the company's stock soaring, making it
more attractive for BYD to raise new funds. BYD stock in Hong Kong
has more than quintupled in a year, giving it a market
capitalization of $91 billion. That is roughly in line with NIO
Inc., a newer Chinese rival, and compares to an $806 billion market
cap for Tesla Inc., according to FactSet.
Other electric-car makers have also tapped equity markets for
funds as they race to secure a bigger slice of the growing sector.
Chinese competitor Xpeng Inc. in December raised $2.5 billion from
a follow-on offering of American depositary receipts, while NIO has
raised more than $4.5 billion in December and January by selling
ADRs and convertible bonds.
A unit of Warren Buffett's Berkshire Hathaway Inc. has held a
stake in BYD since 2008. As of June 2020, Berkshire held 8.25% of
BYD, or nearly 25% of its Hong Kong-listed stock, according to
BYD's half-year report.
Orders for new BYD shares outstripped supply several times over,
with Chinese funds, traditional institutional investors and
hedge-fund managers all participating, according to an update
provided to investors, which was seen by The Wall Street
Journal.
Investors have bid up Chinese car stocks in search of the next
Tesla. They are also betting that improved battery technology and
infrastructure, plus a pledge by China to become carbon-neutral by
2060, will help fuel wider adoption of electric vehicles.
China is already the world's largest market for electric
vehicles, and has become a major battleground for EV manufacturers.
This month, Tesla delivered its first made-in-China Model Y compact
crossover vehicles.
BYD sold 133 million new shares at 225.0 Hong Kong dollars, the
equivalent of $29.03, representing a 7.8% discount to the stock's
last closing price. The deal, first disclosed in December, ended up
being larger than initial plans to raise a maximum of $3.6 billion.
Units of UBS, Goldman Sachs and CICC were the most senior banks on
the deal.
BYD's stock traded nearly 4% higher at HK$252.20 by early
afternoon Thursday in Hong Kong.
Write to Joanne Chiu at joanne.chiu@wsj.com
(END) Dow Jones Newswires
January 21, 2021 02:46 ET (07:46 GMT)
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