Top Lithium Producer Ganfeng Prices Hong Kong IPO at Bottom of Range

Chinese top lithium producer Ganfeng Lithium (SZSE:002460) has priced its Hong Kong listing at the bottom of its marketed range, raising US$424 million, according to sources.

According to the terms of the initial public offering (IPO) revealed last week, the Jiangxi-based company was looking to offer 200.2 million shares priced at between HK$16.50 to HK$26.50. But sources have confirmed Ganfeng priced its offering at HK$16.50 per share — at the bottom end of the range.

It’s been a tough year for Hong Kong IPOs, as the Asian market has been hurt by trade tensions with the US, with many listings trading below their offering prices.

The Shenzhen-listed company, which had earlier this year said it was seeking to raise up to US$1 billion in its IPO, will use part of the money for acquisitions, further exploration and to expand capacity to meet rapidly growing demand from the electric vehicle sector. Lithium is a key element in electric car batteries.

Last week, Ganfeng confirmed it had secured six cornerstone investors including Korean battery makers LG Chem (KRX:051910) and Samsung SDI (KRX:006400).

In September, the Chinese lithium producer signed a deal to supply lithium hydroxide products for Tesla’s (NASDAQ:TSLA) batteries. The agreement is set to start in 2018 and run until 2020, but it could be extended by three years.

The company also agreed to supply lithium to German carmaker BMW (ETR:BMW) for five years and inked a deal with LG Chem to almost double its supply of battery materials from 2019 to 2025.

Ganfeng’s news comes just before another major lithium producer’s IPO. US-based FMC (NYSE:FMC) is expected to list its lithium business Livent in New York next week, seeking to raise up to US$400 million by offering 20 million shares at a price range of U$18 to U$20.

On Thursday (October 5), shares of Ganfeng Lithium were trading at CNY 32.49. The company’s share price is down 31.46 percent year-to-date.

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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.