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China’s Tianneng New Materials raises $137m in Series A round

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Zhejiang Tianneng New Materials, which focuses on the recycling and disposal of waste lithium-ion batteries, has secured 1 billion yuan ($137.2 million) in a Series A round of financing.

Chinese venture capital (VC) firm Puhua Capital and CICC Capital, the private equity (PE) investment arm of financial services group China International Capital Corporation Ltd (CICC), led the Series A round, Puhua Capital announced in a post on its WeChat official account.

Fuzhe Capital, a state capital investor in eastern China’s Zhejiang Province, and CNBM Fund Management, which manages the CNBM New Materials Fund for China’s largest cement and gypsum board producer, China National Building Material, joined the round.

Founded in October 2018, Tianneng New Materials is engaged in the recycling disposal, recycling, and step utilisation of waste lithium-ion batteries. It can currently process 23,000 tonne (23 million kg) of waste lithium-ion batteries per year, with an aim to add another 103,000 tonne to its annual production capacity by 2024.

The firm intends to use most of the proceeds to construct a production base in Binhai of Jiangsu Province.

With the new funding, it also plans to build regional recycling bases and recycling channels for waste batteries across China and replenish its general working capital.

The fundraising plan was first made public in May when Hong Kong-listed battery manufacturer Tianneng Power International Ltd, the controlling shareholder of Tianneng New Materials, disclosed in a stock exchange filing the 1-billion-yuan capital increase agreement that would see its indirect shareholding in this subsidiary decrease to about 49.3% from 65%.

As part of the deal, Tianneng New Materials agreed to complete a public listing before December 31, 2026. Otherwise, the investor group will have the right to exercise a so-called “put option” to demand Tianneng New Materials and its shareholders repurchase the acquired stakes plus an annualised interest rate of 8%. That could result in a maximum exercise price of 1.304 billion yuan ($178.9 million).

The listing target could make Tianneng New Materials the third listed company under Tianneng Holding Group, which already owns Hong Kong-listed Tianneng Power International and Shanghai-listed Tianneng Battery Group.

Tianneng Power International completed its listing in Hong Kong in 2007 as the city’s first power battery issuer from mainland China. Tianneng Battery Group, a provider of power batteries to electric light-duty vehicles, completed its 4.87-billion-yuan ($668.1 million) initial public offering (IPO) on Shanghai’s tech-focused STAR Market in 2021.

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