IPOs in EVs could raise $100bn until 2023, BoA
A worldwide push toward electrification is causing a three-year wave of initial public offerings in the electric vehicle space
that could raise about $100 billion until the end of 2023,
according to Bank of America Corp.
Growing investments
Growing investments in the sector, spanning from batteries to
charging cars, will see companies
spin off units as well as go public, said Patrick Steinemann,
co-head of Global Mobility Group Investment
Banking at Bank of America.
“We’re already well into a wave that will see up to $100 billion
of IPO proceeds being raised in the electrification space,
across the entire value chain of EV, batteries and charging,” Steinemann said
in an interview.
The largest IPO of 2021 stems precisely from that sector; Electric-truckmaker Rivian Automotive Inc. raised $13.7 billion in
its U.S. listing earlier this month and has gone on to soar 47% from its offer price.
Electric vehicle makers became investor darlings last year and
their stocks have staged impressive
rallies amid bets on growing demand for cleaner cars.
Industry leader Tesla Inc. has almost
doubled in value over the past year and billions have
been raised through both IPOs and follow-on share sales.
Chinese car and battery maker BYD Co. last month
raised $1.8 billion in a Hong Kong share
placement, its second such deal this year.
In January, the Warren Buffett-backed company
fetched another $3.9 billion selling new shares.
Growing demand for electric cars will lead to
increasing investments by the companies making
batteries for clean vehicles.
Tripling manufacturing capacity
The top 10 battery makers are expected to nearly
triple their manufacturing capacity by 2022 to
meet future supply commitments and position themselves
for an upcoming surge in demand,
according to BloombergNEF.
“The battery companies will become a universe of
their own, they are now entering a stage where
massive capacity buildup requires a lot of capital to
keep up with the growth of EV demand,” Steinemann said. “So far, battery companies have largely been debt
financed but the next stage of their growth will
be financed through a wave of IPOs.”
One of the largest IPOs to come out of Asia next year,
and potentially globally, will be the spinoff
of LG Chem Ltd.’s battery unit LG Energy Solution in
South Korea, which could raise about $10
billion. It’s one of the world’s biggest battery makers
after China’s Contemporary Amperex Technology Co.
LG Energy Solution resumed the IPO process after
reaching an agreement over the General Motors Co. recall
of Chevrolet Bolt electric vehicles in October. It plans
to submit the IPO prospectus in
early December and take investor orders early
next year, the Seoul Economic Daily reported.
