Chinese Chipmaker to Raise $13 Billion to Bankroll Plants

  • Unit of state-backed Tsinghua plans private share placement
  • Deal is latest as Tsinghua Group aims to be tech powerhouse

A Chinese chip-making affiliate of Tsinghua Unigroup Ltd. plans to raise as much as 80 billion yuan ($12.6 billion) in a private placement of shares to fund a new semiconductor plant, the latest in a series of deals intended to build the state-backed group into a technology powerhouse.

Tongfang Guoxin Electronics Co. will sell 2.96 billion shares at 27.04 yuan each to eight companies and employees, the company said in a filing to the Shenzhen Stock Exchange on Thursday. Of the proceeds, 60 billion yuan will go toward a memory chip plant. Its shares closed at 32.69 yuan in Shenzhen on Oct. 9, before they were suspended from trading, giving it a market capitalization of 19.8 billion yuan, data compiled by Bloomberg show.

Unigroup, the business arm of China’s famed Tsinghua University that announced plans in September to buy a $3.8 billion stake in U.S. storage maker Western Digital Corp., is emerging as one of the industry’s most acquisitive companies. The company is among those helping fulfill the country’s ambitions of building domestic capabilities to wean itself off a reliance on foreign technology.

If the Western Digital deal is completed, it would be China’s biggest acquisition in the technology sector. Earlier this year, Unigroup expressed interest in buying U.S. memory chipmaker Micron Technology Inc., according to people familiar with the matter. This month, it also agreed to buy a 7 billion yuan ($1.1 billion) stake in Tongfang Guoxin from another of its affiliates.

Among the eight companies that will buy shares in the private placement outlined in Thursday’s filing, six were controlled by Unigroup affiliate Tsinghua Holdings Co., which will remain the controlling shareholder of Tongfang Guoxin after the deal, according to the filing. The companies will purchase the shares with cash.

The announcement comes as the Shanghai Composite Index on Thursday entered a bull market after an unprecedented state rescue effort halted a $5 trillion crash. SAIC Motor Corp., a Shanghai-based carmaker, said it plans to raise as much as 15 billion yuan through a private share sale to develop new-energy vehicles.

— With assistance by Emma Dong

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