Phylion Battery secures $136 million in pre-IPO funding

Phylion Battery has raised Rmb922 million ($135 million) in a round of private funding that it hopes will facilitate an eventual listing.

In a filing on Tuesday, the Chinese electric vehicle battery maker gave no indication of its new valuation as it name-checked Yingke PE, two Haitong-linked firms, National Power Investment Group and Boxin Capital among its investors.

But it had a pre-investment valuation of $583 million after trying to sell a 78% stake last year to Beijing Vantone Real Estate for $470 million. That deal eventually fell through.

“The $583 million valuation for Phylion is not cheap,” Lu Mi, professor of lithium battery in Xiamen University of Technology told FinanceAsia after the latest round of funding.

“But battery companies are all expensive these days,” he added, echoing the success of local market leader Contemporary Amperex Technology (CATL), which has seen its stock price treble since its initial public offering on the Shenzhen Stock Exchange in June 2018.

Phylion Battery was set up in 2003 by a group of scholars from the Chinese Academy of Sciences. It produces lithium-ion batteries for scooters and small cars and has offices in Europe and India.

The company's next aim is to restructure its ownership and advance towards an IPO soon, possibly on the new technology innovation board in Shanghai, which could launch as early as June.

Phylion reported a net profit of $15.4 million in 2016 and doubled it in 2017 to $29.9 million. Its net profit between January to March 2018 was $5.4 million.

“Phylion was doing quite good last year, thanks to the increasing sales in Southeast Asia,” Lu said. “Phylion was not that financially successful when China Academy of Science participated earlier, but they are doing quite well these years.”

CHARGING UP

Seeing the evident success of CATL, more investors appear willing to pour money into the battery sector, especially as electric vehicle production ramps up.

One of the largest fundraisings came in February last year, when $742 million was invested in another battery maker Fu Fan Technology.

Phylion has side-stepped some of the fierce competition in the car battery sector but has about half of the Chinese market for scooter lithium batteries. The company also claims to be Europe's second-biggest provider of lithium batteries for scooters.

Given the prevalence of scooters across many Southeast Asian cities, there is huge scope to expand within Asia too.

But the ambition for Phylion doesn't stop at scooters as it is also cooperating with Chinese local car makers to produce batteries for small electric vehicles.

So far it has shipped out 45,000 battery for electric cars, mostly logistics vehicles.

Despite recent safety concerns, especially after two electric vehicles caught on fire last week, NIO Capital's managing partner Ian Zhu sees huge potential in the sector, he recently told FinanceAsia in an interview. He doesn't appear to be alone.