(Yicai Global) March 24 -- Yunnan New Energy New Material plans to raise CNY5 billion (USD706 million) in a private placement to expand two lithium battery separator factories to meet rising downstream power battery demand.

The Chinese supplier, the world's largest separator producer, will issue up to 242 million new shares to no more than 35 investors, it said in a statement yesterday. Some CNY1.5 billion of the money raised will go toward expanding a plant in Jiangxi province, CNY2 billion will go toward increasing capacity at a factory in Jiangsu province, and the remainder will supplement working capital, the company said.

Shares in Yunnan Energy New Material [SHE:002812] were down 1.8 percent at CNY42.44 (USD5.99) as of 1.11 p.m., when the benchmark Shenzhen Component Index was up 1.08 percent.

The firm's plans to expand its Jiangxi plant will cost CNY1.75 billion total and add 400 million square meters to its overall separator capacity, while the Jiangsu expansion will cost CNY2.8 billion and boost output by 820 million square meters, according to the statement. The company did not disclose how long each project would take.

Yunnan Energy New Material has not yet decided who it will sell the shares too, how much it will sell them for or when it will sell them it added. The move will decrease actual controller Paul Li and his family's holdings to 42.13 percent from 54.76 percent but Li will remain in control.

The company could already produce 2.3 billion square meters of lithium battery separators by the end of last year. Its products wind up in the hands of international battery giants like Panasonic, Samsung and LGChem, as well as China's Contemporary Amperex Technology and BYD.

Editor: James Boynton