ZTE has not been able to fully recover since after their US ban was lifted. Despite all problems and obstacles however, the company has managed to push forward, even making a break for the 5G smartphone race with the Axon 5G last year. Now, the company is once again looking up to 5G R&D to mount a serious push for a slice of the market, but they’re going to need funding to achieve that.
ZTE said it was looking to raise 11.51 billion yuan ($1.7 billion) from a private placement of A shares, and that it plans to use the proceeds for research and development of 5G networks and working capital. ZTE claims it will issue about 381 million A shares, which are denominated in RMB and traded on the Shanghai and Shenzhen stock exchanges to ten independent institutional investors in China at CNY30.21 a share.
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In a statement, ZTE said the fundraising will enable it to maintain its “high level of investment in research and development, ensure its technological competitive edge and develop its main products and businesses with core advantages”. The investors buying the shares will be subject to a 12-month lock-up period. ZTE already has approval from shareholders to proceed with the offering.
“It is because of the lock up period which give investors confidence of a stable stock price during the period, and that support the shares from advancing despite the discount,” said Steven Leung, a sales director at UOB Kay Hian in Hong Kong. “Its a vote of confidence to the prospect of 5G and related companies,” Leung added.
ZTE’s Shenzhen-listed shares rose as much as 4% to 38.10 yuan in early trade. Hong Kong-listed stock briefly rose 3.7% to HK$28.05, the highest since March 2018.
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