The United States Congress has urged American banks and JPMorgan to withdraw from the initial public offering (IPO) of China’s battery manufacturer Contemporary Amperex Technology Co. Ltd. (CATL) in Hong Kong.
This IPO could potentially be the largest in Hong Kong this year. Bloomberg predicts that CATL’s IPO financing could reach at least $5 billion.
The US House of Representatives wrote to Brian Moynihan, CEO of Bank of America, and Jamie Dimon, CEO of JPMorgan, stating that assisting CATL in going public could expose the investment banks and their American investors to “significant regulatory, financial, and reputational risks.”
Both banks are responsible for underwriting CATL’s stock.
The committee emphasized that CATL was added to the US Department of Defense blacklist in January due to its connection with the Chinese military. Additionally, the letter mentioned that President Trump’s “America First Investment Policy” memorandum aims to prevent Wall Street from channeling American retail investors’ funds into CATL’s IPO.
CATL is also a major supplier to the American electric vehicle maker Tesla.
CATL protested its inclusion on the US blacklist, claiming it to be a mistake and stating that they have no relationship with the military. While the blacklist does not entail specific sanctions, it may make US companies think twice before engaging in transactions with entities on the list.
The congressional committee stated in the letter that if the investment banks are unwilling to immediately withdraw from CATL’s IPO agreement, the committee will demand detailed responses on 21 potential violations of US law related to risk assessment, compliance agreements, and more.
Bloomberg reported that representatives from Bank of America and JPMorgan declined to comment, and a spokesperson for CATL did not immediately respond to requests for comment.
According to Bloomberg’s data, the first stock offerings in Hong Kong in 2024 collectively raised $11.2 billion, nearly 90% higher than in 2023.
Both Bank of America and JPMorgan experienced a decline in stock underwriting revenue in the first quarter of 2024 compared to the same period the previous year. The uncertainty brought about by tariff conflicts is impacting stock sales activities in the US and Europe, leading to the postponement of most potential IPOs due to market volatility.