On January 21, BYD announced that it would place 133 million new H shares, with a total proceeds from the placement expected to be approximately HK$29.925 billion. The net proceeds are intended to be used to supplement the group’s operational capital, repay interest-bearing debts and invest in research and development. The company would increase its new energy vehicle business layout. As of the close, BYD H shares rose 1.80% to 248.40 Hong Kong dollars and A shares rose 6.09% to 235.52 yuan.
BYD previously issued the “Announcement Regarding the Approval of the China Securities Regulatory Commission for the Issuance of New H Shares”, which showed that the China Securities Regulatory Commission approved the company to issue no more than 183 million overseas listed foreign shares with a par value of RMB 1 each, all of which are ordinary shares.
According to the latest announcement of BYD’s “Placing of New H Shares under General Authorization”, the company and the placing agent entered into a placing agreement on January 21. According to the terms and conditions listed in the placing agreement, the company agreed placing shares issued at the placing price.
The company will issue 133 million new H shares with a par value of RMB 1.00 each in the company’s registered capital in accordance with the terms and conditions set out in the placing agreement. The total face value of the placing shares to be placed is RMB 133 million.
According to the content of the announcement, the placing price of the new H shares is HK$225 per share. Assuming that all the placing shares are placed, the total proceeds are estimated to be approximately HK$29.925 billion. After deducting commissions and estimated costs, the net proceeds are estimated to be approximately HK$29.801 billion. The net amount (after deducting commissions and estimated expenses) raised per H share after the placement is approximately HK$224.1.
Regarding the use of the proceeds from the placing, BYD stated that it intended to use the group to supplement operational capital, repay interest-bearing debts, invest in research and development and general corporate purposes. The company would seize industry development opportunities and increase its deployment of new energy vehicle business.
Specifically, the company will realize the accelerated replacement of fuel vehicles by new energy vehicles through technological innovation and realize the leap from traditional vehicles to smart vehicles through the software and hardware layout in the field of automotive intelligence. Relying on the R&D accumulation, technological advantages and pioneering blade battery technology in the power battery field, we will continue to increase the production capacity of power batteries and promote the output of Chinese power batteries to global automakers.
The placement also provides a good opportunity for the company to optimize its capital structure and financial structure. It is reported that this transaction has attracted the participation of more than 200 institutional investors including many top long-term and sovereign funds around the world. For example, Sequoia China intends to participate in this subscription with a large amount. Other participating institutions include Chinese sovereign funds such as Social Security and CIC, some European and Middle Eastern sovereign funds and upstream and downstream companies in the battery and automobile industry chain.
With the outbreak of the new energy automobile industry, electrification and intelligence are becoming the future development direction of the automobile industry. BYD’s secretary of the board Li Qian said that BYD has completed a flash placement of approximately HK$30 billion in H shares, making it the largest equity financing project in the Asian auto industry in the past decade and the largest non-financial corporate new share placement in Hong Kong’s history. This financing will significantly enhance the company’s capital strength, provide strong financial support for the company to increase its investment in automotive electrification, intelligence and power batteries to help the company achieve rapid business growth and further consolidate its leading position in the industry.
