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THE INDEPENDENT - Origo injects fresh funds in Unipower


Smalltalk: Origo injects fresh funds in Unipower

Investors received an indication of the strength of the market for electric batteries last week when Origo Partners, the London-listed China-focused private equity group, announced a follow-on investment in Unipower Battery. Unipower was set up last year by the privately-held Chinese battery group Huanyu, and makes large polymer batteries that are primarily used to power electric vehicles. The business is currently focused on Chinese public sector buses, a segment that is set to expand as China steps up efforts to meet its target of putting at least 20,000 electric and hybrid buses on the country’s roads by the end of next year.

The opportunity is apparent when you consider that less than 500 pure electric buses and 1,500 hybrid buses were produced in China last year, according to Unipower’s estimates. The appetite is such that Unipower’s current capacity is not enough to meet this year’s indicative demand from its largest customer, “let alone demand from other existing and prospective customers”, according to Origo.

Eyeing this gap, Unipower is looking to increase capacity – and with that in mind, Origo is ploughing in up to $15m (£9.3m) as part of a $22m convertible note offering by the company. The injection is a follow up to Origo’s initial equity investment of $4.3m back in August last year.

The extra investment was welcomed by analysts. “Unipower has an existing customer base and with demand for electric buses being driven by the Chinese Government, we view [it] as well placed to benefit from this growing sub-sector,” Liberum Capital said when the deal was announced. Noting the gap between the vehicles produced last year and the Government’s target for the end of 2012, they added that Unipower’s order book should remain strong.

“It is also positive to hear that Unipower is already performing well, with revenue run rates doubling in the short time in which Origo has been invested in the business,” they said.

Origo chief executive Chris Rynning also touched upon the strides made in recent months. “We are delighted with the progress that Unipower has made since our first investment last year,” he said.

“We see a tremendous opportunity in this rapidly developing sector where short- and long-term demand is underpinned by strong support for electric vehicles from the Chinese Government.”