Bringing in Middle Eastern tycoons, BYD raised HKD 43.5 billion in Hong Kong financing

Author | Zhou Zhiyu

Editor | Zhang Xiaoling

BYD has sounded the horn for its overseas charge.

On the morning of March 4, BYD Company announced on the Hong Kong Stock Exchange that it plans to place 129.8 million new shares at a price of HKD 335.2 per share, with a total amount of approximately HKD 43.5 billion. This will allow it to surpass Midea Group's IPO, becoming the largest financing in the Hong Kong market in the past four years; at the same time, this is also one of the largest equity refinancing projects in the global automotive industry in the past decade.

Wall Street Journal learned that BYD's placement attracted participation from global investors, including sovereign funds and the Al-Futtaim family office from the UAE, with subscription orders being multiple times oversubscribed. Investors have shown full confidence in the global positioning of China's automotive industry.

This is reflected in BYD's H-share stock price. Compared to the previous day's closing, BYD's placement price was approximately an 8% discount, and after opening down 8.14% on March 4, its Hong Kong stock price had rebounded to HKD 349.2 per share as of March 5.

With a new round of financing, BYD's pace of expansion in overseas markets will also accelerate. Meanwhile, multinational automakers are closing factories, laying off employees, and cutting costs. This contrast is a microcosm of the changes in the global automotive industry.

The risks of counter-cyclical expansion are also evident, as geopolitical frictions, cultural differences, and localization challenges in the supply chain test the wisdom of BYD Chairman Wang Chuanfu and the management team. On the road to becoming a global giant, BYD cannot afford to relax in the slightest.

Fundraising

BYD's financing has set multiple records.

The placement amount is approximately HKD 43.5 billion, with a net fundraising expected to be HKD 43.383 billion after deducting commissions and other fees. This is the largest equity refinancing project in the global automotive industry in the past decade, the largest lightning placement project in the history of the global automotive industry, and the second-largest lightning placement project in the history of the Hong Kong market.

The so-called "lightning placement" refers to the process by which a listed company completes a new share placement in a short period of time through a general authorization granted by the shareholders' meeting to the board of directors. This authorization allows the company to issue new shares within a range not exceeding 20% of the existing issued shares, and the process is simplified, allowing the entire placement process to be completed in one day. This is also quite common in the Hong Kong market.

From BYD's placement plan, the 129.8 million new shares account for approximately 4.46% of the currently issued shares and 11.82% of the issued H shares. In the short term, this will dilute shareholder equity.

In terms of price, the placement price is HKD 335.2 per share, which is approximately a 7.8% discount compared to the closing price of HKD 363.6 on March 3. However, from market performance, as of March 5, its H shares had fallen 3.96% compared to the closing price on March 3. This indicates that while there are differences in the market regarding BYD's placement, the overall attitude remains positive.

UBS is one of the overall coordinators for BYD's placement. Li Zhengguo, Vice Chairman of UBS Global Investment Banking and Co-Head of Asian Corporate Clients, previously told Wall Street Journal that this year, investors are particularly seeking companies in the Hong Kong market with strong cash flow and stable growth, such as those related to industrial and industrial technology, which will be more active in the market this year It is worth mentioning that BYD's current placement is also the largest scale of a lightning placement project in the history of Hong Kong's industrial sector.

Bernstein analysts stated that BYD's reasons for the placement in Hong Kong are reasonable, as it is a more direct way of overseas investment financing. Of course, due to the stock placement, BYD is expected to experience some short-term weakness.

An institutional investor told Wall Street Insight that BYD's placement has received a good response from investors in the market, with the issuance scale expanded compared to the inquiry stage.

According to the transaction terms, the company issued 118 million shares at a price of HKD 333-345 per share. From the current announcement, BYD's placement scale has expanded by 10% compared to expectations.

BYD stated that this transaction successfully attracted participation from numerous top long-term investors, sovereign funds, and strategic investors from the Middle East, with subscription orders being multiple times oversubscribed.

Since the beginning of this year, overseas investors have shown a significant change in attitude towards Chinese assets, with the stock prices of Hang Seng Technology constituents, including BYD, rising sharply this year. BYD's financing at this time and the scale exceeding expectations also reflect overseas investors' bullish outlook on Chinese assets.

Strike

In the financing announcement, BYD clearly stated that the funds will be directed towards four major areas: research and development, overseas expansion, working capital, and strategic reserves. Undoubtedly, overseas is the main battlefield of this capital game.

In this placement, the presence of "Middle Eastern tycoons" has once again emerged. The Al-Futtaim family office from the UAE participated as a strategic investor in this transaction.

This company is involved in multiple fields such as automotive, real estate, and retail, representing several internationally renowned automotive brands including Toyota, Lexus, Honda, Dodge, Volvo, Jeep, and Chrysler; the expansion of brands like Zara and Marks & Spencer in the Middle Eastern market also relies on Al-Futtaim's support.

In the past two years, BYD has also reached a strategic cooperation with Al-Futtaim, which is not limited to vehicle sales but also includes extensive after-sales services and charging solutions, aiming to provide consumers with a comprehensive electric vehicle ecosystem.

With Al-Futtaim's participation in this placement, it has also stepped into a strategic partnership based on past cooperation, making the relationship between the two parties closer.

This is just a glimpse of BYD's overseas expansion. A person from BYD's investor relations stated that in recent years, BYD's rapid business growth has brought substantial returns to investors. In the process of international development, BYD will maintain good momentum and continue to reward investors.

Wall Street Insight learned from within BYD that the company expects overseas sales to reach 800,000 units this year. In the first two months of this year, BYD's overseas passenger car sales were 67,000 and 66,300 units, achieving a year-on-year doubling growth.

After this placement, BYD will accelerate its pace of overseas expansion. Eagle Zhao, president of BYD Indonesia, stated in January that BYD plans to complete the construction of the BYD factory in Indonesia by the end of 2025, with an investment of USD 1 billion, and the long-term plan is aimed at the export market BYD's factory in Hungary is scheduled to start production later this year, with an investment of approximately 500 million euros; it is also planning to build a factory in Turkey. BYD's Executive Vice President Li Ke also revealed that there are plans to establish a third factory in Europe.

With the production capacity from the Brazilian manufacturing base, BYD will reach a critical milestone in 2026, significantly increasing its overall capacity through four overseas bases or production lines in Thailand, Indonesia, Brazil, and Hungary.

However, according to the financial report, as of the third quarter of last year, BYD had cash and cash equivalents of 65.81 billion yuan. As the market shifts from "competing on sales" to "competing on technology," and with the accelerated demand for expansion in overseas markets, cash flow reserves have become the survival bottom line for car manufacturers.

BYD's response strategy is clear: exchange equity for time. After receiving 43.3 billion Hong Kong dollars, its capital adequacy ratio will significantly improve, but the cost is a dilution of approximately 4.46% of H-share equity. This resembles a gamble—trading short-term valuation pressure for long-term strategic initiative.

Middle Eastern tycoons and long-term investors are betting not on BYD's "present," but on its "future" of breaking the monopoly of Japanese, American, and European car manufacturers to become a global brand.

Racing

In 2025, the global automotive industry is undergoing an unprecedented differentiation, with the rise of Chinese car manufacturers profoundly changing the competitive logic.

Car manufacturers such as Nissan, Mercedes-Benz, and Volkswagen have announced global layoffs; Ford emphasized last year that its plan to stop producing the Focus compact car in 2025 remains unchanged; Volkswagen announced earlier this year that it would close at least three of its factories in Germany.

Chinese car manufacturers are also continuously integrating internal forces, either through fundraising or by selling off assets to strengthen their cash flow.

Last year, Avita, a subsidiary of Changan Automobile, raised 11 billion yuan, BAIC New Energy raised 8.15 billion yuan in strategic financing, and IM Motors, a subsidiary of SAIC, also raised 8 billion yuan; Geely Holding also sold its Class B shares in Volvo Group last year, with a transaction value of approximately 9.632 billion yuan, although it retained 88.5 million Class A shares in Volvo Group to ensure its position as the second-largest investor in Volvo remains unaffected.

At the same time, despite the impact of tariff barriers, car manufacturers including BYD, Geely, and SAIC have proposed corresponding sales plans for overseas markets, aiming to further bring Chinese manufacturing to the global market.

In November last year, Chery's joint venture factory with Spain's EV MOTORS rolled out its first product, with Spain's Minister of Industry and Tourism, Jordi Évole, introducing that the Ebro factory plans to achieve an annual production of 20,000 vehicles by 2025; Leapmotor has landed production in Europe through Stellantis, and XPeng has also partnered with Volkswagen to leverage its way to global markets.

Chinese car manufacturers are shifting from simply exporting complete vehicles to technology empowerment, transitioning from "product output" to "full-chain overseas expansion."

Last year, China's electric vehicle exports exceeded 2 million units for the first time, with passenger car exports reaching 6.41 million units, surpassing Japan for two consecutive years to become the world's largest automobile exporter.

As traditional giants seek survival in contraction, Chinese car manufacturers are rewriting the century-old rules of the global automotive industry with their composite advantages in capital, technology, and industrial chains. The outcome of this transformation may determine the position of Chinese car manufacturers on the global stage in the next decade The elimination round of the automotive industry has just begun. BYD's financing of hundreds of billions of Hong Kong dollars is not only a vote of confidence in China's new energy industry chain but also a milestone in the global automotive industry's power shift