FAST NEWS: Leapmotor raises $380 million through new share sale

The Latest: Electric vehicle (EV) maker Zhejiang Leapmotor Technology Co. Ltd. (9863.HK) announced Wednesday it has entered into subscription agreements to issue 70.21 million domestic shares to four companies, priced at HK$40.80 per share, representing a 29.11% premium over its closing price on the previous trading day.

Looking Up: The company will receive approximately 2.6 billion yuan ($380 million) from the share sale. It will use 75% of that for new EV model R&D, and the other 25% for working capital and general corporate purposes.

Take Note: The newly issued shares represent approximately 4.99% of Leapmotor’s enlarged share capital, meaning existing shareholders will be diluted.

Digging Deeper: Leapmotor’s new share issue is notable because the shares are domestic and not its Hong Kong-listed H shares. Domestic shares are denominated and traded in Chinese yuan, and are mainly intended for China-based institutions, organizations and individuals. Domestic shareholders enjoy the same rights and bear the same obligations as holders of Leapmotor’s Hong Kong-traded H-shares, which are denominated in Hong Kong dollars. Leapmotor has yet to make a profit, and has relied heavily on continual fundraising, including more than HK$6 billion ($770 million) from its IPO in 2022. The company also got a major cash infusion a year ago when European car giant Stellantis (STLA.US) paid 1.5 billion euros ($1.6 billion) for 21% of Leapmotor’s shares.

Market Reaction: Leapmotor’s shares rose on Thursday and closed up 5.5% at HK$33.35 by the midday break. The stock now trades in the middle of its 52-week price range.

Translation by A. Au

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