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Chinese banks planned to work on an emergency Hong Kong secondary listing of world-leading electric vehicle battery maker CATL for just 0.01 percent in fees, underscoring fierce competition in a once-lucrative listing market where business has slowed significantly.
CICC and CSC are among the banks vying for a lead role in the deal, which will be one of the biggest Hong Kong listings in recent years. JPMorgan and Bank of America are also in line for major roles.
Two people familiar with the matter said CICC’s proposal for a role in the deal suggested they would be willing to work on it for fees of 0.01 percent of capital raised, which could ultimately exceed $7 billion. Two people familiar with the matter said CSC had also offered compensation around that level.
“I think in this market, competitors are willing to do things for next to nothing,” said a senior banker at an institution that applied for the role.
Companies usually use numbers from several banks’ presentations as a guideline when deciding on fees, rather than paying them directly the amount they have suggested. The total set of fees may be unevenly distributed between banks.
CATL planned to pay 0.2 percent of insurance fees, two people familiar with the matter said. Incentive fees on top of that — which are based in part on the value of the orders each bank makes — could increase the final figure, two people familiar with the deal said. Fees for large deals such as CATL listings can often be lower than for smaller ones, but figures below 1 percent are unusual.
Morgan Stanley estimated CATL’s listing could raise up to $7.7 billion, marking one of the largest offerings in the territory in years and giving the Shenzhen-listed company access to offshore funds as it seeks to expand overseas. CATL announced its plans in December, with listing expected later this year.
Bankers said Chinese banks were willing to accept rock-bottom fees for such a large offering because there was little business and the IPO market had yet to recover on the mainland. A director at a European bank who made the presentation said it was no surprise to see rough pitches “given that most of their Chinese team on the mainland has a lot of capacity but no deal”.
US banks plan to work on a deal despite the Pentagon adding CATL — a supplier to Tesla, Volkswagen and Ford — this month on the black list companies it says are linked to the Chinese military.
Interest among some US institutional investors in the allotment has also not waned, according to the bankers involved. The Defense Department list only prevents those named from doing business with the U.S. military and has no direct legal consequences, but it carries reputational risks.
CATL said in a statement that he “has never engaged in any business or activity related to the military,” the move was a “mistake” and is “not expected to have a significant negative impact on our business.”
The battery pioneer abandoned a previous plan to sell up to $5 billion in Swiss global depositary receipts in 2023 following regulatory concerns over large-scale offerings.
On average, banks would seek or receive at least a single-digit fee on a Hong Kong listing, according to investment bankers and prospectuses filed with the stock exchange in 2024.
An executive at another bank running for the role described CATL’s listing as a “franchise-defining deal” and said bankers would want to participate despite the low fees.
Banks also have an incentive to participate in the deal in hopes of future business with CATL, such as block trades that could be more lucrative.
“Everyone just wants league table loans, they’re not trying to make money in this business,” said one senior Chinese banker familiar with the field. “It’s very annoying to see some peers sabotaging the norms, but there’s nothing we can do about it.”
Bank of America, JPMorgan, Goldman Sachs and CICC declined to comment. CSC and CATL did not respond to requests for comment.
