China's Buffett-backed BYD to start IPO roadshow
SHANGHAI (AP) — BYD Co., a Chinese car and battery maker backed by billionaire investor Warren Buffett, is moving ahead with a share offering meant to raise cash for a major expansion.
BYD said Wednesday in a notice to the Hong Kong Stock Exchange that it was beginning price consultations with investors after receiving regulatory approval for the initial public offering on the Shenzhen Stock Exchange.
The company plans to list 79 million shares, or 3.4 percent of its enlarged capital. MidAmerican Energy, a subsidiary of Buffett's Berkshire Hathaway, holds a 9.9 percent stake in BYD.
BYD, which branched into auto making after becoming the world's biggest battery maker, has been investing heavily in expanding its vehicle production capacity despite a 33 percent drop in its profit last year.
BYD postponed its listing in Shenzhen, China's smaller, second market, last year in hopes of tapping a better market environment.
Proceeds from the IPO will go to a 2.2 billion yuan ($338 million) expansion mainly focused on an auto research, development and production base in the company's hometown of Shenzhen, which borders Hong Kong.
The company also plans to build a lithium battery factory.
BYD launched China's first homegrown hybrid vehicle, the F3DM, for the retail market in late 2008. Its inexpensive, conventional sedans are consistent best-sellers.
But auto sales have slowed recently and intense price competition has squeezed profit margins.
The company has branched into production of electric buses and energy storage systems. It says it also plans to launch an SUV and other higher-end vehicles, expanding its lineup to include more profitable segments.
BYD and Germany's Daimler AG have a 50-50, 600 million yuan ($88 million) electric car joint venture.