KUALA LUMPUR (Jan 31): Sports car maker Lotus, in which tycoon Tan Sri Syed Mokhtar Albukhary owns a 49% stake via Etika Automotive Sdn Bhd, is planning a listing of its luxury electric vehicle (EV) unit in the US.
Lotus Technology Inc, the luxury EV division of Lotus, said the listing exercise will be carried out via a merger between Lotus Tech and special purpose acquisition firm L Catterton Asia Acquisition Corp (LCAA).
The merger will value the combined company at US$5.4 billion, taking into account the US$288 million cash in LCAA’s trust account, said Lotus Tech in a statement on Tuesday (Jan 31).
It said all its existing equity holders, including Zhejiang Geely Holding Group, Etika and NIO Capital, are expected to retain their interest, collectively owning an 89.7% stake in the combined company.
Geely owns the remaining 51% interest in Lotus.
The Edge Malaysia, in its Jan 23-29 issue, reported that Geely was mulling over a listing exercise amid market talk that Syed Mokhtar was also looking at undertaking a strategic review of his businesses, which includes the possibility of privatizing DRB-Hicom Bhd.
On Tuesday, Lotus Tech said that upon completion of the merger, it will retain its current name, and its current leadership team led by CEO Qingfeng Feng will continue to lead the combined company, aiming to deliver its first electric SUV in the first quarter this year.
Deutsche Bank is acting as financial advisor for the corporate exercise, with Skadden, Arps, Slate, Meagher & Flom as international legal counsel.
Credit Suisse Securities (USA) LLC is serving as the capital markets advisor, and Shearman & Sterling LLP is acting as international legal counsel to Credit Suisse Securities (USA) LLC.
Lotus Tech has also formed a manufacturing partnership with Geely to leverage on the Chinese automaker’s production capacity.
“This partnership with Geely Holding will enable Lotus Tech to operate with an asset-light business model, focusing on the research and development and distribution of EVs globally (upon integration with the Lotus brand’s existing distribution networks),” it said.
Lotus Tech said proceeds raised from the merger are expected to be used for further product innovation, next-generation automobility technology development, global distribution network expansion and general corporate purposes.
“This is an exciting time for Lotus Tech as we work towards delivering our first fully electric hyper SUV, applying our innovation and engineering expertise to meet the rising global demand for luxury EVs,” said Lotus Tech CEO Feng.
“In LCAA, we have found a partner with an impressive track record of not only building iconic premium brands and creating value for companies by leveraging worldwide consumer expertise, but also bringing them to public markets and powering their long-term development.
“We expect the partnership to provide significant support as Lotus Tech expands globally, with promising brand collaboration and strategic partnership potential worldwide,” he added.
Feng expects the proposed business combination and listing to help position Lotus Tech as a leading global luxury EV company.
LCAA co-CEO Chinta Bhagat said the global EV market is expanding rapidly, with the luxury segment growing at a faster pace than the broader industry.
“China, the EU, the UK, and the US are expected to fuel the majority of this growth over the next decade as government policies in these regions provide further tailwinds for EV sales.
“Lotus Tech is well positioned to benefit from these dynamics, as it is a pioneer in the decarbonisation of luxury automobiles and its management team and R&D experts have demonstrated that they have the ability to lead the energy transition in the company’s target segment and geographies,” he said.