Zhejiang Geely Holding Group raises $400 million in Chinese auto industry’s first ever offshore green bond issuance
The company behind the iconic London Black Cab, Zhejiang Geely Holding Group (ZGH) have launched a bond to help it invest in zero-emission vehicles. A significant proportion of the money raised will be invested at LTC’s new research and production facility in Ansty in the West Midlands.
The first-ever Green Bond on the offshore market from a Chinese automobile company raised $400m for its UK subsidiary, the London Taxi Company. The senior unsecured bonds, issued through ZGH’s wholly-owned subsidiary LTC GB Limited, carry a fixed interest rate of 2.75% per annum with a tenor of five years.
This is the lowest coupon ever amongst the USD bonds issued by Greater China’s auto companies. The issue was oversubscribed at a ratio of close to 6 times final order book of over $2.3bn.
ZGH will use the net proceeds from the Green Bond to finance or refinance the design, development and production of zero-emission capable vehicles by LTC, investing £300m at their research and production facility.
The company is currently developing the next generation London taxi, the TX5. The new model was unveiled last October in London in the presence of the Chinese President Xi Jinping during his state visit to the UK.
The TX5 is a zero-emission capable vehicle and will be launched in the UK at the end of 2017 and in international markets in 2018. The vehicle will hence be compliant with new environmental requirements being introduced in London.
LTC is also working on several zero-emission model concepts, including light commercial vehicles as part of ZGH’s plans to significantly raise production at LTC and position it as a leading manufacturer of green and environmentally friendly transportation.
Yifan Li, CFO of ZGH, said: “We are delighted with the response of investors to our Green Bond offering. The issuance of the Green Bond is in line with our corporate vision to produce the safest, most environmentally friendly and most energy-efficient vehicles.
“The commitment of ZGH and all of the Group’s brands to reduce emissions means we are well positioned to benefit from the shift towards ever greener vehicles.”
Peter Johansen, CEO of LTC, said: “We are committed to producing zero-emission capable vehicles. I believe the issuance of the Green Bond will further enhance our competitive edge in new energy technologies.
“Our next generation of zero-emission vehicles, the TX5, will be sold across the world, creating an environmentally friendly transportation system.”
Bank of China provided a Standby Letter of Credit for the Green Bond. Joint Global Coordinators included Bank of China, Bank of America Merrill Lynch, Barclays and Société Générale.
ZGH engaged Deloitte to provide independent limited assurance in relation to the Green Bond Management Statement