BYD Said to Plan About $1.6 Billion Private Share Sale

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BYD's Vehicle
An employee charges a BYD Co. electric vehicle at the company's campus in the Pingshan district of Shenzhen, China. Photographer: Brent Lewin/Bloomberg

BYD Co. plans to raise about 10 billion yuan ($1.6 billion) in a private A-share placement, people familiar with the matter said, amid a stock-market rally that’s seen its Shenzhen-traded shares almost double in value this year.

BYD is working with banks including China International Capital Corp., China Merchants Securities Co., Guosen Securities Co. and UBS Group AG on the plan, the people said, asking not to be named as the information is private. Details including the size of the offering haven’t been finalized and are subject to change, the people said.

The company, which counts Warren Buffett’s Berkshire Hathaway Inc. as a shareholder, joins the rush of Chinese companies tapping the equity market. They’ve announced $116 billion of secondary stock offerings in 2015, according to data compiled by Bloomberg, a figure UBS Group AG predicts will increase to a record $161 billion by December.

“It makes perfect sense to go ahead with a share placement now, given the rally in the market,” said Harry Chen, an analyst at Guotai Junan Securities Co. in Shenzhen. “BYD needs to boost investment in areas such as battery manufacturing, which has been a bottleneck for its vehicle assembly.”

BYD has halted trading of its Hong Kong and Shenzhen shares pending an announcement for a private placement.

The company said last week it plans to invest 150 million reais ($48 million) building a solar-panel factory in Brazil. The Shenzhen-based automaker expects the plant in Sao Paulo to be able to make 400 megawatts of solar panels a year.

U.S. Orders

BYD projected more orders for electric buses after winning its largest U.S. contract for the vehicles from a mass-transit operator last month. It also plans to start taking orders for electric trucks from overseas buyers in the second half of the year and begin deliveries in 2016, with the U.S. being one of the likely first destinations, the company said.

BYD’s share-sale plan follows that of its peers including Lifan Industry Group Co. and Chongqing Changan Automobile Co.

Lifan, a Chongqing-based carmaker, soared to the daily trading limit today after announcing a plan to raise up to 5.2 billion yuan in a private placement. Changan Auto said last month it plans to raise 6 billion yuan in a private share sale.

Sherry Li, a spokeswoman for BYD, declined to comment. Sherry Tan, a Beijing-based spokeswoman for China International Capital, said the company doesn’t comment on deals. Representatives for UBS, China Merchants Securities and Guosen Securities didn’t immediately comment or respond to queries.

— With assistance by Tian Ying, and Fox Hu

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