Shanghai (ZXZC)- Geely Automobile Holdings Limited (called “Geely Auto” for short) is ready to be tutored by two securities companies before its initial public offering of A shares and listing on the science and technology innovation board (Sci-Tech Board), according to an announcement released on June 30 by the Zhejiang Securities Regulatory Bureau.

China International Capital Corporation Limited (CICC) and Huatai United Securities will serve as the tutoring institutions, according to the announcement. Persons required to be tutored cover all the members of Geely Auto's board of directors (including independent non-executive directors), senior executives, the shareholders who respectively possess over 5% stake in the company, and the actual controller (or legal representative).

All participants submitted relevant information on June 23 to Zhejiang Securities Regulatory Bureau for an official registration, marking a formal start of Geely Auto's pre-listing tutorship.

Expected to be ended in July, the short tutoring period is set as Geely Auto went public on the main board of HKEX (Stock Exchange of Hong Kong), and it has not experienced significant adjustments in the structures of equity stake and assets.

The companies stated on June 24 its board of directors has further approved the proposed RMB share issuance, saying the initial number of RMB shares to be issued shall not exceed 1,731,666,448 shares, representing not more than 15% of Geely Auto's issued share capital as at June 23, 2020. The RMB shares will all be new shares, and involve no conversion of the existing shares.

After deducting the issuance expenses, the proceeds of the proposed RMB share issuance are expected to be used for the R&D of new automobile products, the R&D of prospective technologies, the industrial acquisition, and the replenishment of working capital, said Geely Auto.

Notably, roughly 40% of the proceeds will be used for the R&D of new auto products so as to further enrich the product lineup of Geely Auto and its subsidiaries, and the group's market competitiveness.

The preliminary proposal was unveiled for the first time on June 17, which came as China's central government is stepping up capital market reforms to encourage domestic listings. It is also good news for the China's Nasdaq-like Sci-Tech Board that is striving to attract as many as more high-tech firms.

(Geely Boyue, photo source: Geely Auto)

Geely Auto, the Hong Kong-listed subsidiary of Zhejing Geely Holding Group, has publicly expressed several times its intention of returning to the domestic A-share market. However, it is a rather difficult business for Geely Auto as a red-chip company as it has to cope with a slew of complicated procedures and the laws and regulations within and without the Chinese mainland.

Now, the time has come. According to a document released by the China Securities Regulatory Commission on April 30, the red-chip companies whose market capitalization is not fewer than 200 billion yuan ($28,254,972,000), or which possess self-developed and global leading technologies, boast strong scientific and technological innovation capabilities and have a market capitalization of above 20 billion yuan ($2,825,497,200), will be encouraged to go public on Sci-Tech Board under a pilot program.

“As an industry's bellwether, Geely's return to A-share market may set an example for other firms with similar attempts. How it will perform is likely to affect the market valuation of relevant companies,” said Pan Helin, executive director of the Digital Economy Academy of the Zhongnan University of Economics and Law.

Geey Auto considered that opening the financing channel in the domestic A-share market will help the company further diversify its financing methods and optimize its capital structure, so as to effectively elevate its capital strength and supplement the capital for the strategic development of automobile electrification, intelligence, connectivity and sharing.

The automaker plans to roll out six all-new models this year. Aside from the ICON, the Lynk & Co 05 and the Haoyue that all hit the market in the first-half year, there are the Geometry's all-electric SUV, the Lynk & Co 06 and the Geely Preface still not to miss.