Geely unit Lotus Technology to raise up to $500m in funds before the end of 2021

Fundraising would result in post-money valuation of $5bn to $6bn, CFO says

Lotus Technology is a new unit of China's Geely. Reuters

Lotus Technology, a new unit of China's Geely, set up to develop the technology to power Lotus sports cars, is planning to raise $400 million to $500m before the end of this year, its chief financial officer told Reuters.

Lotus Technology, part of Group Lotus which is in turn owned jointly by the Chinese automaker and Malaysia's Etika Automotive, intends to kick off the funding round before Christmas, Alexious Lee said.

That will give Lotus Technology a post-money valuation – value of a company after a round of financing from external investors – of $5 billion to $6bn, Mr Lee added.

Mr Lee said the firm will launch its first product – an electric sports utility vehicle – in the first quarter of next year and aims to have three models within the next five years.

"We have gotten a lot of traction especially from international investors, because wow, this is Lotus," said Mr Lee, adding that the company was looking to sell a 10 per cent to 15 per cent stake.

The company will spend more than half the new funds on research, and 30 per cent to 40 per cent on marketing with the remainder going to working capital.

Mr Lee said Lotus Technology remained on track for a potential initial public offering as soon as 2023, likely in New York or Hong Kong.

Lotus Cars, the maker of the Lotus Esprit, famously driven by James Bond in 1977's The Spy Who Loved Me, positions its vehicles in a segment similar to rival Porsche. It is set to open a new factory in Wuhan, China, next year.

"We are an asset-light business because we don't own our own manufacturing. It's owned by our parent," said Mr Lee.

Premium and luxury car sales are growing in China as coronavirus pandemic travel restrictions leave consumers in the world's biggest car market with more money to spend.

Lotus Tech's investors include Nio Capital, an investment firm founded by the CEO of Chinese electric vehicle maker Nio, which valued the unit at 15bn yuan ($2.35bn) in September.