China's sovereign fund buys 20% stake in GCL-Poly

GCL-Poly Energy Holdings Ltd (GCL-Poly), China's biggest producer of polysilicon announced Thursday that China Investment Corporation (CIC), the nation's sovereign wealth fund, will spend HK$5.5 billion to buy 20 percent of the company.

The company said that according to the binding framework agreement the two companies signed, CIC will subscribe to 3.108 billion new shares at HK$1.79 per share.

The two sides also agreed to build a joint venture that specializes in photovoltaic or other solar energy projects. The initial capital fpr the joint venture is $500 million. CIC will hold 49 percent shares, GCL-Poly, the rest.

"This transaction marks an important step for GCL-Poly. With our industry expertise in the renewable and clean energy business and our newly gained financial flexibility, the deal will strengthen our financial position and enhance the company's leading role in the renewable energy industry," said Zhu Gongshan, chairman of GCL-Poly.

"The government in China has shown that it supports the solar sector and this is one of the big players in the area," Timothy Kwai, an analyst at Quam Securities in Hong Kong, said Thursday.

Credit Suisse (Hong Kong) Limited and Freshfields Bruckhaus Deringer have been appointed as financial consultant and legal adviser for GCL-Poly, and Goldman Sachs (Asia) LLC and Richards Butler were hired as financial consultant and legal adviser for CIC.

CIC has invested at least $3.69 billion on resources in September, buying stakes in Indonesia’s PT Bumi Resources, Nobel Group Ltd. and the London-traded unit of Kazakhstan’s State-run energy company.
 

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