Private equity firm Origo Partners has acquired a 16.5 per cent stake in Unipower Battery for an aggregate amount of USD4.3m.
Unipower is a new venture established to provide lithium-ion batteries and related materials to China’s burgeoning electric vehicle market.
The company is in the process of being spun out from the Huanyu Group, one of the largest privately held rechargeable battery manufacturers in China.
The Chinese government targets to achieve production capacity of 500,000 electric and hybrid cars in China by 2011. It has recently drafted the 2011-2020 new energy automobile development plan, which recommends over RMB100bn (USD15bn) in subsidies be provided to support the electric vehicle market.
In addition, the Chinese government recently announced a pilot subsidy programme to encourage private purchases of hybrid and electric cars in the cities of Shanghai, Changchun, Shenzhen, Hangzhou and Hefei.
Under the terms of the transaction, Huanyu will transfer its lithium-ion business and related assets (comprising IP, sales and purchase contracts, production lines, R&D facilities and related equipment) to Unipower.
Origo will subscribe for USD4.3m of preferred stock for an aggregate 16.5 per cent interest in Unipower. At the same time, China Equity International Holdings and other private investors are investing a further USD1.7m, bringing the total amount of capital raised in this financing round to USD6m.
The proceeds of the financing will primarily be used to fund capacity expansion and as working capital. Origo’s investment will be funded from its own cash resources.
Chris Rynning, chief executive of Origo, says: "We see a tremendous opportunity in the electrical and hybrid vehicle market over the next few years as China and the developed markets in the EU and the US begin to commercialise lithium-ion battery technologies. We are delighted to be able to partner with an industry leader like Huanyu to capture this opportunity, and we look forward to working closely with Unipower and its stakeholders in growing the business."
