Zeekr is seeking a valuation of up to $5.13 billion in a US IPO, about half of Nio's current market capitalization of $11.6 billion.

(Image credit: CnEVPost)

Zeekr, the premium electric vehicle (EV) subsidiary of Geely Holding Group, is seeking a valuation of more than $5 billion in its US initial public offering (IPO), roughly half of Nio's (NYSE: NIO) market capitalization.

The company plans to issue 17.5 million ADSs (American depositary shares) in a US IPO, with each ADS representing 10 ordinary shares, according to a filing it made Friday.

The offering price range is $18 to $21 per ADS, meaning Zeekr seeks to raise as much as $367.5 million.

Upon completion of the offering, and assuming the underwriters do not exercise their option to purchase additional ADSs, Zeekr will have 2,440,846,254 ordinary shares outstanding, according to its filing.

This means that if Zeekr's ADS offering price is ultimately set at the upper end of the range, it will be valued at $5.13 billion.

For comparison, as of Friday's US stock market close, Nio's market capitalization stood at $11.6 billion, Xpeng's (NYSE: XPEV) at $8.55 billion, and Li Auto's (NASDAQ: LI) at $29.7 billion.

On February 13, 2023, Geely Holding announced that Zeekr had secured a $750 million Series A funding round, which would value the EV maker at $13 billion upon completion of the investment.

In September last year, local media outlet Jiemian reported that Zeekr was seeking a valuation of $18 billion in its planned IPO in the US, comparable to Nio's market capitalization at the time.

However, Chinese EV stocks have been sold off heavily over the past six months, with Nio down about 32 percent, Xpeng down about 45 percent and Li Auto down 21 percent.

Zeekr plans to list on the New York Stock Exchange under the ticker symbol ZK.

The company expects to use about $308.6 million in expected net proceeds from the IPO to develop more advanced EV technology, sales and marketing, and expand its charging network, as well as for general corporate purposes.

Its original shareholder, Geely Auto, will subscribe up to $320 million in ADSs. Investors and shareholders such as Mobileye and CATL are also interested in participating in the subscription and will provide $10 million and $19.08 million, respectively.

Zeekr's revenue in 2021, 2022, and 2023 were RMB 6.5 billion ($898 million), RMB 31.9 billion, and RMB 51.7 billion, respectively.

It has net losses of RMB 4.51 billion, RMB 7.66 billion, and RMB 8.23 billion in those three years, respectively.

The company's revenue from vehicle sales in 2021, 2022 and 2023 were RMB 1.54 billion, RMB 19.67 billion and RMB 33.91 billion, respectively, with gross margins of 1.8 percent, 4.7 percent and 15.0 percent, respectively.

Zeekr seeks to turn around to profitability in 2024 under Hong Kong financial reporting standards, Geely Auto said on March 20 in an earnings report.

Zeekr is targeting sales of 230,000 units this year, according to the earnings report. That represents about 94 percent growth, considering it delivered 118,685 vehicles in 2023.

($1 = RMB 7.2411)

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