Morgan Stanley invests in Chinese plastics firm

The private equity firm will purchase redeemable convertible preferred shares in the NASDAQ-listed company that will convert into common stock at an initial price of $6.25 per share, subject to customary anti-dilution adjustments. MSPEA will also designate two members to be elected to China XD Plastics' board of directors.

China XD Plastics, through its subsidiary Harbin Xinda Macromolecule Material, produces modified plastics primarily used in the automotive industry. It supplies more than 70 auto brands in China, including Audi, BMW, Toyota, Buick, Mazda and VW Golf. The company plans to use the funds to expand and upgrade its production capabilities. China has grown rapidly to become the largest auto market in the world and there is strong demand for high-quality modified plastics.

"We see the automotive modified plastics market in China as having attractive long-term growth prospects and China XD Plastics as having established itself as a strong and leading player in this space," Ed Huang, a managing director at MSPEA, said in a statement. "We are impressed by the company's product development and production management capabilities as well as its experienced management team."

This is the second China PIPE deal MSPEA has completed in three months. At the end of May, it agreed to invest $50 million in Yongye International, a US-listed Chinese plant nutrients producer that had been accused by a short seller of manipulating its earnings. The company denies the accusations.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Greater China
• Industrials
• PIPEs
• Morgan Stanley Private Equity Asia