Being the first major flotation of any Chinese firm in nearly two years, Zeekr Intelligent Technology Holding, which is a developer of EV, made a massive announcement on Friday. It stated that they were aiming for a major valuation of over five billion dollars in the US Initial Public Offering (or IPO).
Now, considering the long-standing regulatory conflict between the United States and China, problems have played a major role in ensuring that Chinese companies cannot participate in US listings.
On Friday, however, Zeekr announced that it aims to generate nearly $367.5 million through the sale of 17.5 million American depositary shares (ADSs) at a price point of $18 to $21.
It was in 2022 that Beijing “softened its stance and released a set of rules last year to revive such listings, after the U.S. accounting watchdog and China resolved the audit dispute,” according to Reuters.
According to several sources, we can consider Zeekr’s IPO listing to be the biggest one to date from any Chinese firm since LianBio which aimed for a valuation of $374 million. Additionally, last year, it was noted that Zeekr was valued at about $13 billion in February.
When asked about the reason for such a massive valuation, it stated that the competition when it comes to the EV market in China has been intense over the years.
Additionally, the fact that the Chinese government had exerted a certain amount of influence regarding the business was also a reason for the stated valuation.
So, what does this mean for the world economy? Let me break it down for you!
Firstly, the successful valuation of Zeekr shows that investors might become confident about the future of electronic vehicles. They are also starting to trust the companies from China, irrespective of the recent tension that we could gauge.
Secondly, this step is a massive success when it comes to the expansion of Chinese companies in international markets. This could (and will) lead to competition that is much more global and innovative in the electric vehicle industry.
Now, because there have been certain political tensions related to regulatory processes between the US and China for a very long time, the listing of Zeekr might have some political impact worldwide.
Firstly, because of Zeekr’s IPO, there are doubts about the Chinese government’s ability to influence the company’s commercial choices. This has the potential to erode the confidence of foreign investors.
Secondly, the business has stated that Beijing may interfere with its operations to achieve political and social objectives. This might put it and its investors in danger of regulatory fines.
Thirdly, a profitable IPO will most likely inspire more Chinese businesses to join the American market. This can alter trade ties and the nature of the global economy.
Additionally, the action may affect diplomatic ties between the United States and China. This is because it illustrates the difficulties of such commercial partnerships while simultaneously reflecting collaboration in the face of current tensions.
Therefore, while it is true that Zeeker’s IPO is a test of the appetite of the global market for Chinese companies, there is one thing we should keep in mind. This event is not just financial but also political.
Because this involves the interests of two major world economies, the changes have the potential to impact and shape future economic and political interactions on a global scale.
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