31 Aug 2010 07:00
31 August 2010
Origo Partners PLC
Investment in Unipower Battery Ltd.
Origo Partners Plc ("Origo") is pleased to announce the acquisition of a 16.5% stake in Unipower Battery Ltd ("Unipower" or the "Company") for an aggregate amount of US$4.3 million.
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 ("Huanyu"), one of the largest privately held rechargeable battery manufacturers in China.
Thanks to significant government support, as well as longer term market dynamics supporting growing demand for electric and hybrid vehicles in China and across the world, the market for Unipower's products is expected to witness explosive growth in the years ahead. The Chinese government targets to achieve production capacity of 500,000 electric and hybrid cars in China by 2011. To this end, the Chinese Government has recently drafted the 2011-2020 new energy automobile development plan, which recommends over RMB 100 billion (US$15 billion) in subsidies be provided to support the electric vehicle market. Furthermore, 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 pilot scheme, consumers will receive a one off subsidy of up to RMB 60,000 (US$9,000) when purchasing a hybrid or electric vehicle.
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 US$4.3 million of preferred stock for an aggregate 16.5 % interest in Unipower. At the same time, China Equity International Holdings Ltd ("China Equity"), and other private investors are investing a further US$1.7 million, bringing the total amount of capital raised in this financing round to US$6 million. 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.
Unipower will pursue a dual business strategy, providing cathode and graphite materials used in the development of lithium-ion products to third party battery manufacturers, as well as complete battery solutions to system integrators and automotive manufacturers for use in hybrid and electric vehicles. By the end of 2010, on the back of a strong order intake from an existing roster of clients, Unipower plans to expand the daily output of its lithium-ion batteries to a total storage capacity of 150,000 ampere hours a day, equivalent to an annualized revenue run rate of approximately US$50 million at present price points.
Commenting on the announcement, Chris Rynning, Chief Executive of Origo, said:
"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 commercialize 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."
For further information about Origo please visit www.origoplc.com or contact:
| Origo Partners plc Chris Rynning (chris@origoplc.com) Niklas Ponnert (niklas@origoplc.com) | +86 1390 124 6417
+86 1351 106 1672 |
| Broker and Nominated Adviser Liberum Capital Limited Simon Atkinson/ Ellen Francis | +44 (0)20 3100 2222 |
| Public Relations: Aura Financial Andy Mills / Nina Legge | +44 (0)20 7321 0000 |
Notes to editors:
Origo Partners:
·; Origo is an AIM- listed established private equity investor and strategic consultancy business, which provides its shareholders with exposure to growth opportunities and private equity returns based on the China growth story.
·; Origo's business model is to generate capital gains from private equity investment in growth companies from which it also generates fees for consultancy services related to further fundraisings, M&A and strategic development.
·; Origo signed a memorandum of understanding with GLG Partners LP in March 2008 to explore asset management and advisory opportunities in China, India and other markets.
·; Origo has a significant portfolio of investments in a range of industrial sectors, including metals and mining, agriculture, renewable energy/clean tech and technology, telecom and media ("TMT").
Huanyu Group:
Established in 1982, Huanyu Group is based in Xinxiang, Henan, in central China. Huanyu Group provides a range of batteries and storage solutions, comprising nickel hydrogen, Nickel cadmium, and lithium batteries, including high-end lithium-ion batteries and related materials. The company's products are used in various applications including power storage, tools, e-motorbikes and electrical vehicles.
The Chinese car market:
China overtook the U.S. last year as the world's largest automotive market, with 13.6 million unit sold in 2009. On the back of rising consumer demand, the Chinese government has taken various steps aimed at promoting the country's automotive industry, including enacting policies aimed specifically at stimulating the nascent market for electrical vehicles.
In January 2009, the Chinese National Development and Reform Commission ("NDRC") issued a new energy car plan and set the target that half of the cars on the roads in China shall be hybrid or electrical vehicles by 2020. Under the plan, China targets to produce 500,000 electric and hybrid cars per annum already by 2011. Since last year, Chinese automotive producers are eligible for various subsidies to reduce the cost of electrical and hybrid vehicles: US$61,000 (RMB 420,000) for hybrid passenger buses, US$ 73,000 (RMB 500,000) for electrical buses, and up to US$8,800 (RMB 60,000) for passenger cars and light commercial vehicles.