China’s Changan Automobile is seeking to sell a 10 percent stake in its electric vehicle brand Avatr Technology, which is moving ahead with a Hong Kong initial public offering amid shrinking sales and cash reserves, for a minimum of CNY3.2 billion (USD479.7 million).
Changan will list just over 306.5 million Avatr shares for sale on the Shanghai United Assets and Equity Exchange, with the disclosure period running through Dec. 10, the state-owned carmaker announced yesterday. Avatr has a valuation floor of CNY31.8 billion (USD4.8 billion), about in line with its post-money valuation after its Series C funding round in December 2024.
The buyer must pay a CNY500 million (USD75 million) deposit and settle the full purchase price within three working days of signing the equity transfer contract, Changan noted. It must also guarantee that the source of funds is legal and compliant, that the transaction will not hinder Avatr’s IPO, and that it has no competing business with the brand.
The buyer will be expected to provide support mainly in areas such as premium brand sales channel development and overseas market expansion, Changan told Yicai. After the deal closes, the Chongqing-based carmaker will continue backing Avatr in core areas including technology research and development, vehicle manufacturing, and supply chain, it added.
If the entire 10 percent stake is acquired by a single buyer, it would become Avatr’s second-largest shareholder. Changan owns about 41 percent of Avatr, making it the largest shareholder, followed by battery giant Contemporary Amperex Technology with around 9.2 percent.
Avatr sold 20,160 vehicles from January through May, according to its IPO prospectus. China Passenger Car Association data shows its domestic retail sales dropped below 3,000 last month. Its cash on hand fell to about CNY6.2 billion in late April from CNY9.7 billion on Dec. 31 and CNY19.3 billion at the end of 2024, implying an average monthly burn rate of more than CNY800 million.
For yet-to-be-profitable automakers listed in Hong Kong, sales expectations affect revenue growth and the price-to-sales ratio, while cash reserves and the cash burn rate relate to a company’s cash runway, a key metric watched by capital market investors, industry experts told Yicai.
Changan’s shares [SHE: 000625] closed 0.3 percent lower at CNY6.88 (US1.03) each today, while the wider Shenzhen market shed 2.1 percent. The stock has fallen 42 percent so far this year.
