China’s CATL just raised $6.7 bln in new equity. The decarbonisation theme is dominating big stock sales. Supply chains and higher costs are a concern, but the Ukraine war will help keep capital coming to clean energy, says ywchen1
Register now for FREE unlimited access to Reuters.comAgainst a 71% plunge in the value of IPOs through May, such green-tinted transactions are proving a rare bright spot. They account for about two-thirds of the $50 billion raised in the top 10 global equity deals, Breakingviews estimates using Dealogic data.
While some governments have turned back to fossil fuels to alleviate stress from recent oil and gas supply shocks, the latest investments suggest that longer-term there will be a push to accelerate the transition to cleaner energy for self-sufficiency reasons. Even in China, where imports of Russian goods have soared, Beijing recently released a series of policies promoting renewables and rolled out more consumer subsidies for electric vehicles.
Rising raw material costs threaten to erode profit and make new investments more expensive, but higher power prices and greater market penetration could offset them. The broader market swoon also may be attracting some fresh looks. CATL’s valuation, for example, has dropped to 59 times expected 2022 earnings from 80 times six months ago, per Refinitiv. That should help green deals continue to overcome markets flashing red.
In total, 42 investors bid for the 132.5 million shares on offer. The final issue price, at 410 yuan, represented a 21% premium to the floor price of 339.67 yuan.Editing by Jeffrey Goldfarb and Thomas Shum
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