(Yicai) Aug. 2 -- Shares of Farasis Energy Gan Zhou jumped after China's ninth-biggest battery manufacturer said Guangzhou Industrial Investment Holding Group, a state-owned enterprise, will become the controlling shareholder of the loss-making startup, aiming to significantly improve its financing capabilities and expansion.

The stock price of Farasis [SHA: 688567] surged as much as 13.5 percent intraday, but closed at CNY22.47 (USD3.10), only 2 percent higher, as the equity started trading again after a week-long suspension due to the deal.

The current controlling shareholder called Farasis Energy Asia Pacific and persons acting in concert intend to transfer 5 percent of the Shanghai-listed firm's shares to a subsidiary of the government-backed company for CNY28.37 (USD4) apiece or CNY1.7 billion (USD236.7 million) in total, the Jiangxi province-based target firm said in a statement yesterday, citing the agreement. The price represents a nearly 29 percent premium over the closing price on July 25.

GIIHG and persons acting in concert will have a combined stake of 18.6 percent in Farasis after the transfer. Farasis Energy Asia Pacific and persons acting in concert will become the second-biggest shareholder as their holding will fall to 16.5 percent.

GIIHG is owned by the government of the southern city of Guangzhou which is also the owner of GAC Group, one of China’s major automakers. GIIHG used to be known as Guangzhou Iron And Steel Enterprise Holding but was renamed in 2019 to focus on industrial investing.

After the transaction, GIIHG will nominate several new directors along with a new chairperson and a legal representative at the battery maker. The current Chairman Dr. Yu Wang will occupy a newly established position of co-chair and will work under the new chairperson.

Established by battery scientists Dr. Wang of Canada and Dr. Keith D. Kepler of the United States in Silicon Valley, California, in 2002, Farasis entered the Chinese market in 2009 by establishing its local subsidiary Farasis Energy Gan Zhou. The latter focuses on the development and production of soft-pack batteries and it debuted its next-generation Super Pouch Solution last September.

Farasis went public on Shanghai's Star Market in July 2020, but it has accumulated over CNY2.8 billion in losses since its establishment. In the first quarter alone, its net loss tallied CNY352 million (USD49 million), widening by 44 percent from a year ago, despite recording CNY3.7 billion in revenue, more than doubling from a year ago, according to its latest quarterly earnings report.

In the first six months of this year, Farasis produced 1.9 gigawatt-hours of batteries in China, resulting in a market share of 1.2 percent, according to data from China Industry Technology Innovation Strategic Alliance for Electric Vehicle.

Editor: Emmi Laine