Geely Automobile Holdings is facing backlash from early investors in its electric vehicle unit Zeekr over a proposed privatization offer that they believe undervalues the company. Five investors who participated in Zeekr’s initial round of external financing in 2021 have expressed dissatisfaction with Geely’s $2.2 billion privatization bid, according to a report by Reuters.
The investors, including CATL, Intel Capital, and Boyu Capital, have sent letters to Zeekr’s board and special committee, stating that the privatization price does not reflect Zeekr’s true value. They argue that the offer values Zeekr at just $6.5 billion, significantly lower than its peers such as Li Auto, Nio, and Xpeng. The investors believe that Zeekr’s cash flow and profit prospects are superior to those of its competitors and have called for a careful evaluation of the offer.
Zeekr’s valuation has been a point of contention, with the company being valued at $9 billion during its first round of financing in 2021. Subsequent rounds of funding saw Zeekr’s valuation increase to $13 billion in 2023, only to drop to $5.5 billion at the time of its IPO. This fluctuation in valuation has raised concerns among investors about the fairness of Geely’s privatization proposal.
Despite the investor dissatisfaction, Geely, which currently holds a 65.7 percent stake in Zeekr, may have the voting power to proceed with the privatization without the approval of other shareholders. The proposed purchase price of $2.57 per Zeekr share or $25.66 per American Depositary Share (ADS) represents a 13.6 percent premium over Zeekr’s closing price on the US stock market.
If the privatization is completed, Zeekr would become a wholly-owned subsidiary of Geely and delist from the New York Stock Exchange. Investors are closely monitoring the situation as they await a decision from Zeekr’s board and special committee on the privatization offer.
In conclusion, the disagreement between Geely and early investors in Zeekr highlights the complexities of valuing a high-growth EV company in a rapidly evolving market. The outcome of this dispute will have significant implications for Zeekr’s future and the broader electric vehicle industry.
