(Yicai Global) July 21 -- Shares of BTR New Material Group slumped after the chairman of the most valuable company listed on the Beijing Stock Exchange was placed under investigation for suspected insider trading, potentially jeopardizing the firm’s plan to raise CNY5 billion (USD739 million) via a private placement.

After diving more than 9 percent at one point this morning, BTR [BJ: 835185] ended today 4.7 percent lower at CNY70.38 (USD10.41). Major BTR shareholder China Baoan Group [SHE: 000009] also sank, slipping nearly 5 percent before finishing 1.8 percent down at CNY12.46 (USD1.84).

Details of the violations that led to the securities regulator investigating He Xueqin are unclear. His suspected insider trading was not linked to BTR’s stock, nor did it involve the shares of other firms listed on the BSE, the Shenzhen-based company said in a statement in response to the exchange’s queries. He is still carrying out the duties of chairman and his various other positions at BTR, it added.

The probe could endanger the private placement plan BTR announced earlier this month, the largest fundraiser since the Beijing Stock Exchange opened last November. If executives at listed firms are under investigation by the China Securities Regulatory Commission for suspected rule breaches, private placementss are paused until clear conclusions are available, BTR said, citing bourse rules.

BTR previously said proceeds of the share sale would be used for three capacity expansion projects for battery anode materials, a new energy technology research institute construction project as well as to supplement working capital. Today the firm said it would meet the projects’ funding through other means.

BTR is a leading supplier of lithium-ion battery anode material and a unit of China Baoan, where He is vice president.

Due to its market position in the lithium-ion battery anode material industry, BTR became one of the first listed companies on the Beijing bourse. Its market value exceeded CNY90 billion (USD13.3 billion) in the early days of the listing and it remains the bourse’s most valuable firm with a market cap of about CNY53.7 billion.

Editors: Tang Shihua, Peter Thomas