Keyuan Petrochemicals, a manufacturer of petrochemical products in China, has closed a private placement financing with institutional investors with gross proceeds of USD20.3m to fund the purchase of raw materials for its petrochemical production facility.
The lead investor was Prax Capital, a China-focused private equity fund that invests in the company through its solely owned investment vehicle Dragon State International.
Keyuan Petrochemicals issued 540,001 investment units. Each unit includes ten shares of series B preferred stock convertible into ordinary common shares, in addition to 1.5 class C warrants with an exercise price of USD4.50 per share and 1.5 class D warrants with an exercise price of USD5.25.
TriPoint Global Equities was the placement agent on the transaction.
"We are delighted to add Prax Capital as a strategic shareholder," says Chungfeng Tao, chairman and chief executive officer of Keyuan. "With a successful track record of helping emerging companies and extensive network of entrepreneurs and investors in China, Prax will be a tremendous financial and strategic asset to Keyuan. While we have adequate capital to meet our growth plans, the USD20.3m investment gives us supplementary financial flexibility to secure additional raw materials at favourable prices to run through our recently increased production projection of 660,000 metric tons."
Keyuan will invest the USD20.3m of new capital to generate incremental revenues and profits. The company recently raised its 2010 guidance by approximately 20 per cent to USD550m revenues and USD36.3m net income.
As part of the financing, Lei Xu (Michael), a partner of Prax Capital, will join Keyuan’s board of directors.
Prax is a private equity fund focusing on growth capital investments in China.
"We are very attracted by Keyuan’s unique technology and its entrepreneurial management team; a rare combination in the petrochemical sector in China," says Xu. "We look forward to a long-term partnership with Mr. Tao and his team to grow Keyuan into a leading non-State-owned petrochemical company in China."
