(Yicai Global) March 23 -- Shares in Chengxin Lithium Group surged as much as 4.7 percent today after the Chinese supplier of electric car battery materials said it plans to raise CNY3 billion (USD470.5 million) in a private placement of new shares in which auto manufacturer BYD will participate.

Chengxin Lithium’s share price [SHE:002240] closed up 0.04 percent at CNY54.61 (USD8.50) as investors cashed in. Earlier in the day it had hit CNY57.20.

Chengxin Lithium will issue new shares at a price of CNY42.99 (USD6.75) each, the Shenzhen-based company said yesterday. The funds raised will be used to replenish working capital and repay debts.

The buy-in by BYD, which is expected to hold an over 5 percent stake after the transaction, will push up Chengxin Lithium’s sales as the electric car maker’s demand for lithium products jumps amid strong growth in its new energy vehicle and energy storage businesses, Chengxin Lithium said.

As a strategic investor, Shenzhen-based BYD will be able to advise Chengxin Lithium, which produces around 28,000 tons of lithium carbonate and 15,000 tons of lithium hydroxide a year, on its global business expansion and improve its network in the new energy industry.

Chengxin Lithium is expecting an as-much-as 33-fold leap in net profit last year to CNY920 million (USD144.4 million), it said earlier.

Editor: Kim Taylor