Svolt Energy Technology may turn to Hong Kong for listing after having scrapped plans of an initial public offering on the Star Market, the technology board of the Shanghai Stock Exchange, an insider close to the firm told Yicai.
At the end of last year, Svolt announced plans to raise CNY15 billion (USD2.1 billion) through a Shanghai IPO, with over two-thirds of the proceeds expected to be used to fund two capacity expansion projects. But according to the Shanghai bourse’s official website, the Changzhou-based firm terminated its IPO application in October.
The company has comprehensively taken into account various factors and decided to withdraw the listing application for the best interests of the company and its investors, Svolt said earlier, adding that it was considering launching some financing rounds.
The period when new energy firms were quickly getting listed in the Chinese mainland for financing has ended, a new energy industry veteran told Yicai, adding that regulators have tightened supervision on companies applying for IPOs only to finance capacity expansion projects.
Nearly 30 firms in the new energy vehicle supply chain got listed on the Star Market since its establishment four years ago, and many listed firms carried out private placements of over CNY10 billion. But since this year, the fundraising environment has cooled down, mainly because of the destocking period of the lithium battery industry and the worse-than-expected terminal consumption.
Therefore, as the new energy sector pushes for high-quality growth, which will lead to fiercer competition, Svolt will find itself in a disadvantaged position, given the fact that it has not yet turned profitable, the industry veteran noted.
Svolt was spun off from Chinese automaker Great Wall Motor in 2018, but its actual controller remains GWM’s Chairman Wei Jianjun, with a stake of over 40 percent. GWM and its affiliates are also Svolt’s main clients.
Between 2019 and the first half of last year, Svolt lost a total of over CNY3 billion (USD421 million). Its business revenue reached CNY10 billion last year. Before filing for the Shanghai IPO, Svolt completed seven fundraisers, achieving a valuation of about CNY46 billion.
