In a year marked by cautious optimism in equity capital markets, investment banks are finding themselves compromising on profit margins to secure high-profile deals. The latest example is the landmark Hong Kong listing of Contemporary Amperex Technology Co. Ltd. (CATL) $300750.SZ, China’s leading electric vehicle battery manufacturer. Despite being the largest equity offering in the world so far in 2025, the deal is expected to generate unusually low underwriting fees for the syndicate of nine banks involved.
CATL disclosed in its regulatory filing that the fixed commission rate for the offering is just 0.2% of the funds raised, an amount significantly below historical norms. The company’s report estimates that the total maximum payout to underwriters will reach only HK$238.7 million, with the majority of that contingent on the successful execution of the deal — an approach that reflects shifting dynamics in the IPO landscape post-pandemic and amid regional financial headwinds.
The CATL deal highlights a growing trend among issuers, especially in Asia: cost-sensitive capital raising. With Chinese corporates becoming more selective and price-driven in their engagement with financial advisors, underwriting fees are being compressed even in marquee transactions.
By accepting slimmer margins, investment banks are signaling a willingness to prioritize market share and visibility over short-term revenue. This strategy reflects the fiercely competitive environment for equity mandates, as banks recover from a prolonged slowdown in initial public offerings that began in late 2021 and only began to ease in early 2025.
Post-pandemic IPO drought has left banks eager to reestablish deal momentum.
Issuer pricing power has increased, especially among major Chinese firms.
Hong Kong market volatility continues to weigh on institutional demand.
Strategic positioning motivates banks to accept reduced economics to maintain client relationships.
CATL’s deal has set a new benchmark for underwriting economics in Asia, and the numbers tell a compelling story. Other prominent listings over the past year have offered higher compensation, yet still well below pre-2020 norms — reflecting a systemic shift across the industry.
CATL : Largest offering of 2025 with just 0.2% fixed underwriting fee, totaling a maximum of HK$238.7 million, primarily performance-based.
Midea Group $000333.SZ: Paid three times more in fees for a $4.6 billion listing in 2024.
S.F. Holding $002352.SZ: Offered 0.8% fee on its $792 million Hong Kong secondary listing in late 2024.
Average fee levels for comparable deals in pre-pandemic years hovered between 1.0% and 1.5%, especially in large-cap transactions.
Discretionary bonus structure is gaining traction, rewarding successful execution rather than deal volume alone.
While lower fees may seem counterintuitive for large-scale transactions, they underscore a broader structural adjustment in how investment banks operate in Asia’s capital markets. As more Chinese corporates expand global capital access, issuers have greater leverage in negotiating terms. For banks, maintaining visibility in high-impact transactions like CATL’s may offer long-term strategic value — particularly as deal pipelines slowly rebuild.
At the same time, the trend raises concerns over the sustainability of fee compression, especially for mid-tier banks that rely more heavily on underwriting income. The CATL listing could serve as a bellwether for future deals, influencing how compensation is structured across global financial hubs like Hong Kong, Shanghai, and Singapore.
The implications of such a sale for the automation sector are profound and far-reaching.