BYD raises up to $5 bil. in its biggest post-IPO funding for EV research, global growth

China's largest electric vehicle (EV) maker BYD plans to raise up to HK$40.7 billion ($5.05 billion) in a primary share placement to support its research and development efforts and overseas expansion, according to a term sheet seen by the Post.

The company will issue 118 million shares at between HK$333.00 and HK$345.00 per share to investors in a top-up stock sale through a book-building exercise which was launched on Monday evening. The offer price represents a discount of 5.1 to 8.4 percent to its closing share price of HK$363.60 on Monday.

This is the biggest post-IPO fundraising by BYD since its listing in Hong Kong in 2002. In 2021, BYD raised HK$29.9 billion from a share placement.

"The net proceeds from the placing are intended to be used by the group to invest in research and development, expand overseas business, supplement its working capital and for general corporate purpose," according to the team sheet.

CLSA, Goldman Sachs and UBS are the joint placing agents for the deal.

BYD's fundraising comes amid an ongoing price war in mainland China's EV sector that has eroded the earnings of all companies. In December, the Shenzhen-based carmaker slashed the price of its Sealion 05 hybrid SUV by 11.5 percent to 99,800 yuan ($13,701) to widen its customer base on the mainland, where the penetration of electric cars crossed 50 percent in July.

"All carmakers have to strengthen their financial muscle due to the intense competition," said Ding Haifeng, a consultant at Shanghai-based financial advisory firm Integrity. "Leading players like BYD also need to raise fresh capital to reduce debt levels and support expansion."

In January, Hong Kong-based consultancy GMT Research said in a report that BYD's reliance on financing from working capital had masked its high debts. BYD's true net debt as of June 30, 2024, was more than 323 billion yuan, compared with 27.7 billion yuan in its interim earnings report, according to the consultancy.

BYD delivered 4.27 million pure electric and plug-in hybrid vehicles in 2024, an increase of 41.3 percent from a year earlier. It also became the mainland's largest carmaker across EVs and conventional cars last year after overtaking Germany's Volkswagen.

In the first two months of 2025, BYD's sales have jumped 92.5 percent from a year earlier to 623,384 units. The carmaker's discounts have bolstered sales on the mainland, where cutthroat competition is expected to lead to the closure of more underachieving EV assemblers this year.

BYD reported a net profit of 25.2 billion yuan in the first three quarters of 2024, an increase of 18.1 percent from a year earlier. Revenue jumped 18.9 percent to 502.2 billion yuan.

It was one of only three Chinese EV makers to generate a profit last year, alongside Li Auto and Huawei Technologies-backed Aito.

Last month, BYD said it would offer an autopilot system in nearly all its cars at no extra cost, with the aim of making autonomous driving affordable for all mainland customers.

At least 21 models - including the Seagull hatchback priced from 69,800 yuan - will be fitted with its indigenous advanced driver assistance system, which enables cars to navigate on highways and conduct self-parking.

Read the full story at SCMP.