The CSRC did not immediately comment when contacted by Reuters. CATL did not respond to a request for comment.
PRIVATE PLACEMENT The sources said the Chinese regulator has concerns over the vast scale of CATL's GDR offering. The CSRC is also examining CATL's planned use of proceeds, sources said, adding the regulator has questioned the battery maker's need to raise so much money after it raised 45 billion yuan ($6.56 billion) in a jumbo domestic share placement in June.
The company said at the time proceeds raised in the placement will be used to fund the production and upgrades of lithium-ion batteries in four Chinese cities, and enhance research and development.
The private placement was the biggest equity capital market transaction in China last year and the second largest follow-on deal globally in 2022, according to Dealogic data. At $5 billion, the GDR deal would easily be the largest such listing by a Chinese company in Switzerland, according to Refinitiv data.
Chinese companies began listing in Switzerland last year
after the launch of cross-listing platform to allow companies to
raise capital by issuing and listing GDRs on the Swiss exchange
SIX. Swiss companies can issue Chinese Depository Receipts on
the Chinese exchanges.
GDRs are one fundraising option used by companies to offer
investors outside the firms' home bases a chance to buy and
trade the stock on shareholders' local exchanges.
Offshore investors are attracted to Chinese issuers' GDRs as
they can generally buy the shares with a 10% discount and freely
convert them into corresponding Chinese shares after 120 days of
trading on European boards. With much better liquidity on the
domestic market, investors can exit more easily.
But when investors transfer the capital from onshore to
offshore, it consumes some of China's foreign exchange reserves,
while issuers usually keep the proceeds raised for overseas use.
Such practices have also made Chinese regulators less keen to
wave through mega-GDR offerings, two of the sources with
knowledge of the matter said.
($1 = 6.8590 Chinese yuan renminbi)
(Reporting by Scott Murdoch in Sydney and Julie Zhu and Kane Wu
in Hong Kong; Additional reporting by Zhang Yan; Editing by
Anshuman Daga and Kenneth Maxwell)
