Chinese electric vehicle manufacturer BYD announced on Tuesday that it raised $5.59 billion in a primary share sale in Hong Kong, marking the largest of its kind in four years. Initially planning to sell 118 million shares, the company increased the offering to 129.8 million shares.
Despite opening with an 8% decline, in line with the discounted price of the stock, BYD's Hong Kong shares showed a drop while the Hang Seng Index was down by 1.5%.
This transaction is the largest equity follow-on offering in the automotive sector globally within the past decade. The Al-Futtaim Family Office, based in the United Arab Emirates, was a significant investor in the share sale.
Over the years, many Chinese automakers have been targeting the Middle East to expand their overseas sales, although the region's market size remains comparably small to China's domestic market.
With a competitive portfolio of affordable battery-powered vehicles, BYD has swiftly emerged as China's largest automaker since 2022, with over 90% of its total 4 million car sales in 2024 taking place in China.
The shares were priced at HK$335.20 ($43.11) each, at a 7.8% discount. The company aims to utilize the raised funds for research and development, global expansion, working capital, and general operations.
Planning to sell 5 to 6 million cars in 2025, BYD has been bolstering its production capacity by adding facilities and increasing its workforce. Additionally, it intends to enhance its technological competitiveness, evidenced by outfitting its models with the God's Eye smart driving system.
To expedite its international business objectives, BYD opted to raise funds offshore in Hong Kong, leveraging greater flexibility compared to China's domestic processes. Goldmans Sachs, UBS, and CITIC Securities spearheaded BYD’s recent share sale.