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Tianqi Lithium kicks off Hong Kong IPO, aiming to raise US$2 billion in deal that could open the valve and unleash 180 companies on the market

South China Morning Post logo South China Morning Post 29/06/2022 Pearl Liu, Georgina Lee
  • Tianqi plans to sell 164.12 million shares at between HK$69 and HK$82 each, potentially raising up to HK$15.7 billion at the top end of the pricing range
  • The retail portion of the IPO ends on July 6, and the stock will begin trading on the main board of the Hong Kong exchange on July 13 under the mnemonic 9696

Tianqi Lithium, one of the world's biggest lithium producers, will kick off its US$2 billion Hong Kong secondary listing on June 30, in what could be the city's biggest financial deal so far this year,

Tianqi plans to sell 164.12 million shares at between HK$69 and HK$82 each, potentially raising up to HK$15.7 billion (US$2 billion) at the top end of the pricing range including a 15-per cent overallotment , according to a statement by the Chengdu-based company. The retail portion of the IPO ends on July 6, and the stock will begin trading on the main board of the Hong Kong exchange on July 13 under the mnemonic 9696.

The offering - the first to exceed US$1 billion in the past nine months in the city - could help loosen the valve in Hong Kong's initial public offerings (IPO) pipeline, where at least 180 companies are biding their time to sell shares, waiting for the world's fourth-biggest declining stock market to crawl out of its 12-month slump.

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"We expect more sizeable deals [to be] done over the coming months, as sentiment improves, [giving] the city the chance to seize a place among the top five" in the 2022 worldwide rankings of IPO destinations, said Louis Lau, partner at KPMG's capital markets advisory group, adding that he expects 80 IPOs to be completed this year in Hong Kong, raising a combined HK$200 billion.

The June 24, 2022 trading debut of GogoX Holding in Hong Kong, marking the return of the ceremonial gong used in the listing process on the Hong Kong exchange after a two-year hiatus caused by the Covid-19 pandemic. Photo: Dickson Lee © Provided by South China Morning Post The June 24, 2022 trading debut of GogoX Holding in Hong Kong, marking the return of the ceremonial gong used in the listing process on the Hong Kong exchange after a two-year hiatus caused by the Covid-19 pandemic. Photo: Dickson Lee

Tianqi mines lithium ores and supplies lithium products. It owns the Cuola mine in Yajiang in Sichuan province, and has a 26 per cent stake in the Greenbushes mine in Western Australia, which is the world's largest single source of spodumene, as the lithium-bearing ores are called.

A crucial material for battery packs, lithium is in high demand as the world switches to battery-powered electric vehicles and eschews automobiles powered by fossil fuels. China, the world's largest market for automobiles and electric cars, is expected to see 60 per cent of all new vehicles being fully electric by 2030, according to a UBS forecast.

A worker with car batteries at a factory for Xinwangda Electric Vehicle Battery, which makes lithium batteries for electric cars and other uses, in the Jiangsu provincial capital of Nanjing on March 12, 2021. Photo: Agence France-Presse © Provided by South China Morning Post A worker with car batteries at a factory for Xinwangda Electric Vehicle Battery, which makes lithium batteries for electric cars and other uses, in the Jiangsu provincial capital of Nanjing on March 12, 2021. Photo: Agence France-Presse

Lithium carbonate, the industrial chemical used as the precursor for compounds used in lithium-ion batteries, was trading recently at US$50,000 per tonne, the price having soared nine-fold since the start of 2021 due to strains in the worldwide supply chain.

Half of the world's refined lithium was supplied by four companies in 2020, according to a report by Wood Mackenzie. Beside Tianqi, they are Chile's SQM, Albemarle in North Carolina and Ganfeng in Jiangxi province, but the Sichuan-based company has an edge over its competitors because it owns mines with lithium-bearing ores.

Tianqi's lithium is used in electric cars, electronics manufacturers and glass producers. Founded by 67-year-old engineer Jiang Weiping in 2003, Tianqi has been listed in Shenzhen since 2007, and it filed their applications to Hong Kong's bourse in the first quarter.

"We understand there are many concerns about the turbulence and uncertainties in the IPO markets in Hong Kong, but we are certain about the future of the next-generation energy [industry] and we are certain about Tianqi's advantages," Jiang said during a press conference to kick off his company's IPO. "We believe we should seize what we know for sure."

The company's shares fell 4.4 per cent to 122.80 yuan in Shenzhen, having risen 22 per cent this year.

Hong Kong had not seen a stock sale larger than US$1 billion since the US$1.2 billion IPO by Dongguan Rural Commercial Bank in September 2021, according to data compiled by Refinitiv.

As many as 180 companies have already filed their listing applications, and are awaiting the opportune market conditions to kick off their stock sales, said Nicolas Aguzin, chief executive of the Hong Kong Exchanges and Clearing Limited (HKEX), the exchange operator.

"They are waiting in line, hoping to get listed and are awaiting the opportune moment to go to market," Aguzin said last week. "The outlook is good, and the market seems to be warming up."

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This article originally appeared on the South China Morning Post (www.scmp.com), the leading news media reporting on China and Asia.

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