(Yicai Global) Nov. 23 -- Shares of Yunnan Energy New Materials fell after the world’s largest supplier of lithium battery separators by shipments announced a plan to raise CNY12.8 billion (USD2 billion) in a private placement of shares to fund an increase in production capacity.

Yunnan Energy’s stock price [SHE: 002812] ended 1.5 percent lower today at CNY265.91 (USD41.65), after earlier slumping as much as 6.3 percent.

The Yuxi-based company will use CNY9.8 billion (USD1.5 billion) of the proceeds from the private placement to build new plants for battery separators and aluminum-plastic films, while the rest will supplement working capital, it said in a statement yesterday. New plants will improve Yunnan Energy’s product quality, cut output costs, enhance competitiveness, and consolidate its global-leading position, the firm added.

A private placement, in which additional stock is issued to specific investors, dilutes the number of a listed company’s outstanding shares, often leading to a short-term decline in the stock price.

Yunnan Energy’s major clients include lithium battery makers Panasonic, Samsung Electronics, LG Chem, Contemporary Amperex Technology, and BYD. As their plans foresee battery capacity exceeding 920 gigawatt-hours by 2025, Yunnan Energy will need to produce more than 13.8 billion square meters of separators a year by 2025 to satisfy demand, it said.

In the first half of this year, its shipments of separators made through a wet process totaled 1.2 billion square meters. That is expected to reach 2.8 billion by the end of the year if Yunnan Energy keeps producing at full capacity and sells all products.

Amid the booming new energy vehicle sector, wet-process separators are becoming more popular than dry ones due to the rising market share of ternary lithium batteries. Separators make up about a third of a power unit’s cost.

Editor: Futura Costaglione