The British government has called for an in-depth review of a planned acquisition by China’s Shanghai Kington Technologies of a Welsh graphene maker on national security grounds. Kwasi Kwarteng, the United Kingdom’s business secretary, has written to the Competition and Markets Authority (CMA), ordering a so-called Phase 2 investigation of the proposed acquisition of Perpetuus Group by a group led by Shanghai Kington, which researches and develops products based on polyamide fibres. Such investigations can last six to eight months. “The UK remains firmly open for business. However, we have been clear that foreign investment must not threaten our national security,” Kwarteng said in a statement . “I have considered the evidence presented to me and asked the [CMA] to undertake an in-depth investigation so we can fully consider the implications of this transaction.” Graphene can be used for a variety of purposes, including strengthening plastics and making aeroplane wings lighter. The CMA previously conducted a Phase 1 review, finding in a report published on Wednesday that the deal would not result in “substantial lessening” of competition in Britain. A representative of Shanghai Kington could not be immediately located for comment on Thursday. The business secretary holds “quasi-judicial” powers to intervene in certain mergers on public interest grounds. Kwarteng said he believes the interest of national security “continues to be relevant and should be subject to further investigation”. The business secretary first issued a notice in September, raising national security concerns about the transaction. Perpetuus, based in Swansea, is active in the commercial manufacture of graphene and other nano materials, which the British government said have a range of strategic applications. The company has initially focused on the tyre production sector, according to its website. The group of companies consists of Perpetuus Advanced Materials and several of its subsidiaries, with 91 per cent of Perpetuus Advanced Materials’ shares controlled by three investors. Perpetuus’s chief nanotechnology scientist and scientific adviser is Zhongfu Zhou, who received his PhD in the physical chemistry of metallurgy at the University of Science Technology Beijing, before receiving a doctorate of philosophy in materials science from the University of Oxford. Zhou is also a 25 per cent shareholder and director of Shanghai Kington. Shanghai Kington is a customer of Perpetuus and its products include an enhanced fertiliser, which helps crops retain moisture in arid areas. In its report, the CMA found that Perpetuus had discussed the sale of graphene manufacturing equipment to Shanghai Kington before the Covid-19 pandemic, with Zhou acting as Shanghai Kington’s representative. That deal was never consummated and the sale of the equipment was “of interest” to the British government, the regulator said. At the same time, Perpetuus discussed an equity investment by Zhou in 2020 and 2021, according to the CMA. Those discussions were ongoing when the business secretary issued his notice in September, the competition authority found. “The CMA believes that Dr Zhou may exercise a material influence over [Shanghai Kington] SKT and that any acquisition of a controlling stake in Perpetuus by Dr Zhou may therefore also result in Perpetuus and SKT ceasing to be distinct as a consequence of both being under Dr Zhou’s control,” the regulator said.