Warren Buffett’s EV Stock Falls After $1.8 Billion Stock Sale | The Salesmark

Warren Buffett’s EV Stock Falls After $1.8 Billion Stock Sale

Warren Buffett’s EV Stock Falls After $1.8 Billion Stock Sale

BYD, the Chinese electric vehicle and EV battery maker backed by Warren Buffett, is raising money to fund growth. The $1.8 billion move triggered a selloff in overseas trading.

BYD (ticker: 1211. Hong Kong) stock was down 1.7% after the company’s announcement Friday. Hong Kong’s Hang Seng Index was off 0.7%; the S&P 500 was down 0.3%.

The Shenzhen-based electric vehicle maker aims to sell 50 million new shares in a price range of HK$273.5 (US$35.17) to HK$279.5 each, according to a term sheet seen by the South China Morning Post. That would represent a discount of 5.8 percent to 7.8 percent to the HK$296.60 closing price of its H-shares in Hong Kong on Friday.

The new shares would begin trading on November 1 and represent about 1.8 percent of BYD’s market cap.

Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses, and infographics brought to you by our award-winning team.

BYD plans to use the proceeds from the sale to supplement its working capital, repay debt, invest in research and development, and for general corporate purposes.

The share sale comes a day after BYD reported that its net profit dropped 27.5 percent to 1.27 billion yuan (US$199 million) in the third quarter. BYD’s shares fell 1.7 percent on Friday following is earnings announcement the night before.

In August, a mainland brokerage backed by Citic Securities said industry leader BYD should be valued at no less than 1.5 trillion yuan by 2022, or 169 times its projected earnings. The company’s market cap was 821.9 billion yuan as of Friday’s close, according to Bloomberg data.

On Monday, BYD, which is controlled by its billionaire co-founder Wang Chuanfu, said it had received approval from the Hong Kong stock exchange for the proposed spin-off of its semiconductor unit in mainland China.

The company still needs to meet a number of conditions before the spin-off can be implemented, including receiving approval from the Shenzhen Stock Exchange and the China Securities Regulatory Commission (CSRC), according to a stock exchange filing.

The carmaker first announced in May a plan to list BYD Semiconductor, its 72.3 percent-owned chip-making unit, on ChiNext, a Nasdaq-like technology board operated by the Shenzhen bourse, with the aim of raising 2.69 billion yuan.

However, the proposed spin-off in an initial public offering in Shenzhen was put on hold in August after the bourse launched an investigation into the law firm advising on the deal. The exchange suspended more than a dozen other IPO applications at the same time involving the same law firm.

BYD revived its application to list the semiconductor unit last month after filing additional paperwork with Chinese regulators.

Related Posts