Lotus was turned into gold, and Li Shufu got another IPO
Author: Wang Lei
Edited by Qin Zhangyong
The first car IPO this year came from Geely.
On February 23, Lotus Technology, a subsidiary of Geely Automobile, officially listed on NASDAQ with the stock code "LOT", becoming the first auto company IPO in the U.S. stock market this year and the largest IPO of Chinese concept stocks in 32 months.
As of press time, Lotus shares are trading at $13.8, with a total market capitalization of more than $9 billion, higher than Xpeng ($8.142 billion) and lower than NIO ($11.2 billion) and Li ($36.9 billion).
This figure is also far more than the pre-IPO valuation, and at the same time more than three times that of the same brother "Polestar".
In the longer term, it has also boosted capital's confidence in the auto industry, and emerging automakers are not doing well in the U.S. stock market at the moment, such as Rivian and Lucid, whose stock prices plummeted after their earnings reports on Thursday. Lotus's good start has made the market look forward to the transformation of high-end supercars.
Of course, the happiest is Li Shufu, who not only fulfills the dream of supercar, but also has a more complete capital map.
01
Li Shufu's 8th IPO
Lotus's road to market is familiar and tortuous.
At the beginning of last year, Lotus and LCAA, a special purpose acquisition company, announced that they had reached a definitive merger agreement, and the merger was expected to be completed in the second half of that year, but Lotus Technology did not go public as scheduled.
In early February, LCAA's shareholder meeting approved a proposed SPAC with Lotus Technology, which values the entity at $5.4 billion, and Geely and other owners are expected to retain an 89.7% stake in Lotus Technology after the SPAC merger.
Since the announcement of the transaction, Lotus Technology has received more than US$880 million in financing commitments from global investors, existing shareholders and strategic partners through public equity private placements ("PIPEs") and convertible bonds. This is one of the largest financings for a SPAC-related transaction since 2023.
LCAA is a NASDAQ-listed special purpose acquisition company (SPAC) formed in January 2016 and part of L Catterton, a consumer private equity investment firm.
L Catterton is the world's largest private equity firm focused on the consumer industry, with assets under management of US$33 billion, or approximately RMB240 billion. It was created in partnership with private equity firm Catterton, luxury brand group LVMH and Bernard Arnault's family holding company, Groupe Arnault.
SPAC is a hot listing mechanism in the U.S. market in recent years.
SPAC is different from the common backdoor listing in the domestic capital market in the past, but a shell listing. Generally speaking, the traditional IPO is "taking the project to find money", and the SPAC is "taking the money to collect the project".
The process of a SPAC is that the sponsor first creates a shell, then raises investors, forms a cash-only "shell", and then promotes this "shell", that is, the SPAC goes public first. Because it's all cash, listing review is relatively easy.
Then acquire a target company, load high-quality assets in a certain period of time, so as to achieve "shell companies with cash" and "target companies with actual operations" to form a 1+1=2 consolidated statement class, and then become a new listed company.
The process is fast, the listing review is easy, and the success rate is high, which has made many quasi-enterprises with large capital demand taste the sweetness, and Li Shufu's previous IPOs are also related to SPACs.
In June last year, ECARX, a subsidiary of Geely Holding, completed a merger with COVA Acquisition Corp., a special purpose acquisition company, and listed on the NASDAQ.
In June 2022, Polestar went public on the Nasdaq after announcing the completion of the business combination with Gores Guggenheim, a special purpose acquisition company (SPAC). In addition, Geely Automobile, Volvo, Qianjiang Motorcycle, Hanma Technology, and Lifan Technology have been listed before.
In recent years, Li Shufu's spin-off subsidiary listing has been "addicted", and from the level of having completed the IPO listing process, Lotus has been the 8th IPO of "Brother Shushu".
It is worth mentioning that three months ago, ZEEKR Automobile also officially submitted F-1 (non-US domestic company prospectus) documents to the US Securities and Exchange Commission, planning to be listed on the New York Stock Exchange with "ZK" as the stock code, and ZEEKR also announced the completion of Series A financing, with a valuation of about $13 billion.
Now that Tesla has successfully landed in the capital market, ZEEKR is not far away.
02
From legend to legacy
Lotus is a polarized car brand in the history of the British automotive industry, as a legendary brand with seven F1 constructors' titles, although born in a small workshop, it has a racing history as glorious as Ferrari.
Lotus can be traced back to 1948, when a 20-year-old British university student named Colin Chapman decided to modify an old Austin Type 7. His modding tool is an electric drill, and his modding site is the backyard of his girlfriend's house.
In this way, the world's first "Lotus", the Lotus mark 1, was born based on an old Austin 7.
In 1952, Chapman officially founded the Lotus Mechanical Engineering Company, a racing car manufacturing company. Lotus continued to refine and update the design of its cars, forming a team that competed in Formula 1 for the first time in 1958.
Chapman's passion for racing also led Lotus to success, winning seven F1 Constructors' Championships from 1963 to 1978, alongside Ferrari and Porsche.
However, a company cannot survive by racing cars alone, and in order to make money, it must produce mass-produced civilian vehicles.
Although Lotus has also launched several civilian models, including the Elite, Elen, Europa, Esprit and many other classic models, it has also carried out its own track spirit - excellent driving experience, but poor reliability, which has led to low sales, coupled with high production costs, Lotus factory has been carrying huge financial pressure.
Eventually, in 1978, Lotus fell into financial crisis and Colin Chapman had to sell it to British car giant Halma Hidley for restructuring. Unfortunately, in 1982, Colin Chapman tragically died, which was tantamount to a devastating blow for Lotus, and then ushered in a loss period of more than 40 years.
At the same time, it also started a career that changed hands several times. It was successively "sold" to Toyota, General Motors, Italian businessman Romano Artioli, who bought Bugatti, and Proton Motors.
Until 2017, Geely Holding Group acquired a 49.9% stake in Proton Motors, and took advantage of the trend to acquire a 51% stake in the luxury sports car brand Lotus for 51 million pounds (about 450 million yuan). After changing hands several times, Lotus went around and around and was finally taken over by Geely.
In August 2021, Lotus Group announced the establishment of Lotus Technologies and the establishment of its global headquarters in the Wuhan Economic and Technological Development Zone, as part of a comprehensive transformation to electrification.
However, this ultra-luxury brand, which has a history of 76 years, cannot escape the fate of losses, and in the past two years or so since it stepped into China's hot new smart car track, Lotus has not delivered a satisfactory answer in the Chinese market.
According to the previously submitted prospectus, in 2021, 2022 and the first half of 2023, Lotus Technology's net losses will be US$111 million, US$725 million, and US$353 million respectively, with a cumulative loss of US$1.188 billion, or about 8.542 billion yuan.
For the current Lotus, it is undoubtedly a good thing to be able to land on the US stock market, after all, the degree of money burning in car manufacturing is well known, and Lotus is still a "wealthy new force" with insufficient self-hematopoiesis.
This is also the reason why Lotus actively enters the capital market - to obtain enough funds through external financing to provide protection for the next more fierce competition in the "sea of blood" of automobile brands, and the IPO is a rare opportunity for Lotus to transform and develop its brand at this stage.