China's Zhongheng Electric Jumps by Limit on USD600 Million Investment From Battery Giant CATL

(Yicai) April 9 -- Shares of Zhongheng Electric surged by their daily trading limit after saying battery maker Contemporary Amperex Technology will invest CNY4.1 billion (USD600 million) to buy a stake in the Chinese data center power systems supplier's controller, entering into an electrical equipment tie-up, including computing power infrastructure.Zhongheng Electric [SHE: 002364] closed up 10 percent at CNY31.93 (USD4.67) a share in Shenzhen today. CATL's stock [SHE: 300750] fell 0.3 percent to CNY389.99 (USD57.09).CATL will invest in Zhongheng Technology Investment via a capital increase, using its 99.7 percent stake in Times Tianyuan Technology, valued at CNY1.2 billion (USD175.6 million), along with around CNY2.9 billion in cash, Hangzhou-based Zhongheng Electric announced late yesterday. After the deal is completed, CATL will hold a 49 percent stake in the target firm.The combined shareholding in Zhongheng Technology of controlling shareholders Zhu Guoding and his wife will be diluted to 51 percent following the deal. In addition, CATL said it will nominate one director and one deputy general manager for Zhongheng Electric.Based on Zhongheng Technology's owning 35.6 percent of Zhongheng Electric shares, after the transaction is completed, CATL will indirectly hold 17.4 percent of the shares, becoming the firm's second-largest shareholder.In addition, Zhongheng Electric and CATL will ally on green information and communications technology infrastructure, electric vehicle battery charging and swapping equipment, as well as supporting power systems, and specialized power equipment and power supply systems for computing centers, data centers, and artificial intelligence clusters, after the deal is completed, Zhongheng Electric noted.The move is an important investment by CATL in the downstream of the new energy supply chain, following its investments in upstream battery material suppliers Canmax Technologies and Fulin Precision, extending its reach into the core equipment supply segment of energy infrastructure that supports the digital economy, which will help enhance its presence in the new power systems and digital energy areas.Zhongheng Electric is a leading supplier of high-voltage direct current power supply equipment. It has become a core partner for data centers' power supply systems of Chinese internet giants such as Alibaba Group Holding and Tencent Holdings.Last year, Nvidia picked Zhongheng Electric as a key collaborative vendor for the US chip giant's HVDC power solutions, focusing on providing highly reliable, low power usage effectiveness full-scenario power supply solutions for AI computing centers.Times Tianyuan is a leading supplier of production equipment for lithium batteries and new energy power systems, including lithium battery assembly gear, power conversion systems, and charging and swapping equipment.Editor: Martin Kadiev