China’s sixth-largest car maker by sales, Guangzhou Automobile Group (GAC Group) , plans to sell up to 15 billion yuan ($2.2 billion) worth of shares to fund development of its green car business, proprietary brands and factories, the firm said late on Monday.
Chinese automakers have invested billions in developing electric and petrol-electric hybrid vehicles at the direction of the government, which sees green cars as a way to leapfrog global competitors more experienced in traditional petrol engines while also cutting heavy pollution.
Five investors involved in the private placement of GAC Group A-shares are mainly controlled by the government in the southern metropolis of Guangzhou, Thomson Reuters’ IFR reported on Tuesday.
The automaker, like most domestic peers, is a state-owned enterprise.
GAC Group said in an exchange filing that the proceeds would be used in 10 projects, with nearly a third of the funds to be spent on research and development of green energy cars and other technology.
Other projects include factory expansion and improvement and developing a host of new models for its GAC Motor brand.
The automaker’s Shanghai-listed shares jumped 9.6 percent after resuming trading on Tuesday, closing the session up 6 percent. Trading had been halted on Oct. 18 pending the announcement.
The newly issued shares account for roughly 10 percent of the automaker’s outstanding stock.
In addition to making cars under a wholly owned brand, GAC Group also makes vehicles through joint ventures with Toyota Motor Corp, Honda Motor Co Ltd and Fiat Chrysler Automobiles NV.
