Midea Taps Bond Market for $2.2 Billion to Shore Up Offshore Cash Reserves
May 7 (Reuters) — Midea Group, China’s leading home appliance manufacturer, announced Thursday it plans to raise HK$17.25 billion (approximately $2.2 billion) through two separate convertible bond issuances, a move analysts say reflects the company’s push to bolster offshore liquidity and fund international expansion.
The Shenzhen- and Hong Kong-listed firm said the bonds will mature in 2027 and 2033, with each tranche carrying an aggregate principal amount of HK$8.62 billion. The 2027 bonds have an initial conversion price of HK$96.82 per H-share, while the 2033 bonds are priced at HK$115.76 per H-share. Midea intends to list the bonds on the Vienna MTF, operated by the Vienna Stock Exchange.
“This is a strategic move to lock in low-cost funding while the market is still receptive,” said James Liu, a Hong Kong-based credit analyst at a regional brokerage. “Midea is clearly positioning itself for more aggressive overseas moves, especially in Southeast Asia and Europe.”
Not everyone is convinced the timing is ideal. Sarah Chen, a retail investor in Shanghai, voiced frustration: “They’re raising billions while the stock is barely moving. It feels like they’re diluting shareholders without a clear plan. I’d rather see them buy back shares than issue more debt.”
The company stated the proceeds will be used to reduce financing costs, raise working capital, and meet other corporate needs. The dual-listed firm has been expanding its footprint beyond China, with recent investments in robotics, smart home technology, and industrial automation.
“Midea’s offshore liquidity has been a concern for some time, especially given the geopolitical headwinds and capital controls,” said Dr. Michael Tan, an economist at a Singapore-based think tank. “This bond issuance is a pragmatic step to ensure they have the firepower to compete globally without relying on onshore funding channels.”
The bond sale comes amid a broader trend of Chinese companies tapping international debt markets to diversify funding sources. Midea’s move is seen as a vote of confidence in its long-term growth strategy, though short-term market reaction remains cautious.
($1 = 7.8345 Hong Kong dollars)
(Reporting by Shivangi Lahiri in Bengaluru; Editing by Sherry Jacob-Phillips)