TPG Capital set to invest HK$1.1b in Comtec Solar
Comtec Solar Systems Group, a major Chinese maker of monocrystalline solar wafers, says TPG Capital will invest up to HK$1.17 billion in the firm.
TPG will subscribe for HK$780 million of unsecured convertible bonds due 2016. The bonds are convertible into new ordinary Comtec shares at an initial conversion price of HK$3.90.
TPG will also receive 95 million warrants with the right to subscribe for one ordinary share each, with an initial exercise price of HK$4.10 per warrant. The warrants have a maturity of five years. Comtec will raise HK$390 million if the warrants are all exercised.
If the bonds are fully converted and warrants fully exercised, TPG will hold 295 million ordinary shares, or 21 per cent of Comtec's total enlarged issued share capital.
Shanghai-based Comtec, which supplies wafers to solar cell and battery makers, said the proceeds would be used to expand its solar wafer production capacity.
The company expected wafer production to reach 1,400 megawatts this year, up from its previous forecast of 1,000 megawatts, Comtec chief executive John Zhang said.
Last year, Comtec increased production capacity to 600 megawatts from 200 megawatts in 2009.
Revenue for the year was 1 billion yuan (HK$1.19 billion), up 102 per cent year on year, while net profit soared to 223 million yuan from 25 million yuan.
Gross profit margin increased to 32.4 per cent from 10.9 per cent a year earlier.
Zhang expected solar wafer prices to fall 10 per cent this year, but said Comtec would maintain a healthy profit margin through cost controls.
'We will improve our technology to use less polycrystalline [raw material],' he said, estimating that Comtec could cut costs by 15 per cent this year.
'For large-scale players in the industry, gross profit margins will stay at around 20 per cent in the long run.'
TPG, which has US$48 billion of assets under management, said this was its first solar investment in China.
'The investment in Comtec is consistent with TPG's strategy of collaborating with high-quality companies in China,' said Stephen Peel, managing partner of TPG Asia.
Comtec shares closed 1.69 per cent lower at HK$4.08 yesterday. The benchmark HSI fell 1.3 per cent.
Cooling effect
Comtec expects the price of solar wafers to fall this much this year: 10%
