Great Wall Motor Weighs Selling Stake in $6 Billion Battery Unit Svolt, Sources Say

(Bloomberg) — Great Wall Motor Co. is exploring options including selling its stake in Svolt Energy Technology Co. as the battery firm’s initial public offering in Shanghai may be delayed, according to people familiar with the matter.

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The Chinese automaker has held initial talks with prospective buyers of the stake, including Contemporary Amperex Technology Co. Ltd., the world’s biggest maker of electric vehicle batteries, the people said. CATL has conducted preliminary due diligence on the asset, though there’s no certainty that the companies will proceed with any deal, the people said.

Svolt last year applied for a listing on China’s Nasdaq-like Star board with plans to raise as much as 15 billion yuan ($2.1 billion). The IPO plan could be delayed after China vowed to temporarily slow the pace of listings as part of its efforts to rescue its sagging markets, the people said, asking not to be identified as the information is private.

Set up in 2018, Svolt develops and manufactures vehicle battery and energy storage, according to its website. Great Wall Motor holds a 39.4% stake in the unit with about 76.5% of the voting rights, Svolt’s preliminary IPO prospectus shows. The Chinese carmaker and its affiliates were Svolt’s top client, accounting for about 57% of its sales in the first half of 2022, the prospectus shows. Other major clients include Hozon New Energy Automobile Co., Zhejiang Leapmotor Technologies Ltd. and Zhejiang Geely Holding Group Co.

Svolt has completed seven private funding rounds and counts Country Garden Venture Capital, a Xiaomi Corp.-backed investment fund, CDH Investments Fund Management and Xpeng Inc. among its backers, according to the IPO filing. The startup was valued at about 46 billion yuan after the December 2021 funding round, a supplementary filing shows.

The Shanghai Stock Exchange in March briefly suspended the review for the IPO as it sought more information from the company. The regulator resumed the process in June after Svolt provided updated financial details and answered questions about its relationship with Great Wall Motor and how it verifies its revenue. It is unclear whether the regulator is satisfied with the answers, as one of its concerns is Svolt’s reliance on Great Motor, the people said.

Shenzhen-listed CATL has the largest market share in the global electric vehicle market. It counts Tesla Inc., Ford Motor Co., Volkswagen AG and Nio Inc. among its main customers. It’s also a major supplier of battery modules and cells to Svolt, according to the IPO prospectus.

Representatives for CATL, Great Wall Motor and Svolt didn’t respond to requests for comment.

–With assistance from Linda Lew and Danny Lee.

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