Extreme Krypton A round financing exceeds 5 billion yuan

(Text/Zhang Jiadong Editor/Zhou Yuanfang)

On February 13th, Geely’s high-end smart electric brand Kyo announced the completion of Series A financing of 750 million US dollars (equivalent to about 5.09 billion yuan), with a post-investment valuation of nearly 13 billion US dollars. Geely said that the raised funds will be mainly used for research and development of extreme products and technologies, global business development and user experience improvement.

Extreme Krypton 001 Source: Extreme Krypton

It is reported that the five investors in this round of financing are Amnon Shashua, founder of Mobileye Global Inc, Contemporary Amperex Technology Co., Limited, Yuexiu Industrial Fund, Trading Fund and XinAn Zhi Fund. Immediately after the delivery, Geely Automobile Holdings Co., Ltd. will hold 54.73% (calculated on the converted basis) and about 51.33% (calculated on the fully diluted and converted basis) of the equity in Krypton, and Krypton will remain an indirect non-wholly-owned subsidiary of Geely.

According to public information, Extreme Krypton Intelligent Technology Co., Ltd. was established in March 2021. In 2022, a total of 71,000 vehicles were delivered, making it one of the few new energy vehicle companies to achieve the delivery target. While the delivery volume has increased, Geely has also begun to seek the IPO road for Krypton.

In October 2022, Geely first disclosed the split listing plan of Krypton. Two months later, Krypton submitted a draft registration statement for possible IPO to the SEC.

Krypton splittingCity suggestion Source: Geely Automobile

Geely said that in view of the industry trend and based on the evaluation of the company and Krypton’s business and operation, the spin-off will enhance the value of Krypton, enable Krypton to develop independently and fully release its potential, thus benefiting shareholders.

However, the insiders believe that the reason why Krypton is eager to seek independent listing is that it needs new financing means. According to the financial report data released by Geely, from the first car listed in 2021 to the first half of 2022, the total net loss of Krypton is close to 1.8 billion yuan. According to An Conghui, CEO of Extreme Krypton, in the first half of 2022, the gross profit margin of extreme Krypton vehicles was only about 5%, which was far from the gross profit margin of more than 10% of new car companies at the same price.

Lack of self-hematopoietic ability makes Geely need to "transfusion" to Krypton constantly in research and development and sales. From this point of view, krypton’s "independence" obviously helps Geely Holding Group to release pressure.

However, after the opening of the year, the current market performance of Krypton is not ideal. In January this year, a total of 3,116 new cars were delivered, down 11.73% year-on-year and 72.51% quarter-on-quarter. According to the plan, this year, the Krypton brand also plans to launch two brand-new products, thus achieving the delivery of 140,000 vehicles throughout the year, which means that its monthly delivery needs to double compared with last year.

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