GCL-Poly Subsidiary Sets Up Investment Fund

GCL-Poly Energy Subsidiary To Contribute 40% To RMB 3.35 Billion Investment Fund For Industrial Transformation, Upgrading Of Xuzhou Enterprises In Clean Energy Industries, Including Solar; Another Subsidiary Enters Into Sale & Lease Agreement
05:13 AM (Beijing Time) - 17. April 2019
GCL silicon production

Jiangsu Zhongneng (in the picture) is an indirect subsidiary of GCL-Poly Energy Holdings which is part of this investment fund through which investments will be made in another indirect non-wholly owned subsidiary of the company, Xinjiang GCL New Energy Materials Technology Co., Ltd., among other investments. (Photo Credit: GCL-Poly Energy Holdings Limited)

Key Takeaways

  • GCL-Poly Energy Holdings’ polysilicon making subsidiary Jiangsu Zhongneng Polysilicon has set up an investment fund which is worth RMB 3.35 billion ($499 million) in limited partnership
  • Jiangsu Zhongneng will be the largest contributor as it will invest RMB 1.35 billion ($201 million) or 40% of the total value of the fund
  • The fund will promote the ‘industrial transformation and upgrading of Jiangsu Zhongneng and the competitiveness of Xuzhou enterprises in the photovoltaic and other clean energy industries’
  • Named Xuzhou Zhongping GCL Industrial Upgrading Investment Fund LLP, it will prioritize investments in corporations in Xuzhou, particularly make equity investment in another indirect non-wholly owned subsidiary of the company, Xinjiang GCL New Energy Materials Technology Co., Ltd.
  • Another subsidiary of the company has sold its 140 MW solar project only to take it on lease from the buyer to raise funds

Chinese polysilicon producer GCL-Poly Energy Holdings Limited has announced its indirect wholly-owned subsidiary Jiangsu Zhongneng Polysilicon Technology Development Co., Ltd. has set up a RMB 3.35 billion ($499 million) investment fund in China along with partners in a limited partnership agreement.

The polysilicon making subsidiary will make the highest contribution of 40% to the total or RMB 1.35 billion ($201 million) to this fund, which will promote the ‘industrial transformation and upgrading of Jiangsu Zhongneng and the competitiveness of Xuzhou enterprises in the photovoltaic and other clean energy industries’.

Total capital commitments payable by Jiangsu Zhongneng will be funded by internal resources of the group, said GCL-Poly.

The tentative name of the investment fund is Xuzhou Zhongping GCL Industrial Upgrading Investment Fund LLP. It has a shelf life of 7 years to begin with. It will prioritize investments in corporations in Xuzhou, particularly make equity investments in another indirect non-wholly owned subsidiary of the company, Xinjiang GCL New Energy Materials Technology Co., Ltd., and also in the ‘intelligent slicing project’ to be carried out by the company.

Sale and lease agreement

GCL-Poly Energy also said its solar power project development business GCL New Energy Holdings Limited has raised RMB 600 million ($89 million) by selling its 140 MW Shenmu Solar Power Plant to Cinda Financial Leasing.

As per the agreement, Cinda Financial has now leased the Shaanxi located project back to GCL New Energy for a period of 9 years for an estimated rent of RMB 752 million ($112 million) along with a finance lease service fee of RMB 59.4 million ($8.85 million).

“As a developer of solar power plant projects, the GNE Group requires capital from time to time to construct its solar power plant projects,” explained the management while adding that the GNE Group will be able to derive additional liquidity by utilizing its existing investments in its existing equipment and assets. The company will be able to benefit from the additional working capital to support its business and operational activities.

At the end of 2018, annual production capacity of GCL-Poly Energy was 70,000 metric tons for silicon and 30 GW for wafers. Its annual revenues in 2018 slided 13.6% YoY and gross profit tumbled 38.6% on the back of Chinese domestic PV demand dropping and wafer ASPs declining (see GCL-Poly Energy Reports Over 120% Net Loss In 2018).

Anu Bhambhani

Anu Bhambhani is the Senior News Editor of TaiyangNews

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Anu Bhambhani