(JW Insights) Aug 3 -- Farasis Energy(孚能科技), China's ninth-biggest battery manufacturer, said Guangzhou Industrial Investment Holding Group (GIIHG), a state-owned enterprise, will become the controlling shareholder of the loss-making startup, aiming to significantly improve its financing capabilities and expansion, reported Yicai Global on August 2.

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 RMB28.37 ($4) apiece or RMB1.7 billion ($236.7 million) in total, the southern China’s Jiangxi Province-based target firm said in a statement on August 1, 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 city of Guangzhou, the capital of southern China’s Guangdong Province, 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.

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.

Farasis went public on Shanghai's Star Market in July 2020, but it has accumulated over RMB2.8 billion in losses since its establishment. In the first quarter alone, its net loss tallied RMB352 million ($49 million), widening by 44 percent from a year ago, despite recording RMB3.7 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, said the Yicai Global report.

(Gao J/Yuan XY)