The Chinese electric car company BYD, of which Warren Buffett has a partial ownership stake, is looking to issue new shares in order to raise $1.9 billion.
In trading on Tuesday, the company shares were halted on the Hong Kong market, and on Monday they were halted on the Shenzhen market, pending the announcement of this deal, which was described by the company as a private A-share placement.
Once the deal is completed, the amount of shares and the price would be revealed according to BYD.
Warren Buffett of Berkshire Hathaway is one of the company investors, and has experienced benefits from the frothy price shares seen across the tech sector in China.
The company chose not to elaborate about what the funds will be used for from private placement, but according to analysis, the timing would allow this group to take advantage of the share price ramp-up. The cash from this investment would potentially help the company in research and development, and give it a chance to gain an edge against Tesla, its rival, according to analysts.
The Shenzhen-listed BYD shares have almost doubled in value over the last year, and they are currently pacing the overall market. Technology stocks in China are some of the best performers in both the Shenzhen and Shanghai stock exchanges.
Back in December 2014, shares of BYD dropped by as much as 47% in one day due to some serious panic selling.
20 years ago, BYD got its start by making mobile phone batteries, but it has evolved into producing hybrid and electric vehicles. The group has plans that are outlined, which will allow them to take on Tesla in the electronic car market, where its biggest advantage mainly revolves around batteries. Efficient, lightweight and high energy batteries are recognized as the biggest and most important component of successful electronic automobiles.
Since the company launched its vehicle business back in 2003, BYD has become one of the most successful automakers in China. Outside of the Chinese market, on the other hand, their main focus has been selling buses instead of cars.
The company has projected an increase in electronic bus orders because last month they won their largest contract from a mass transit operator in the United States. The company also has plans outlined that will allow them to take orders for electronic trucks from buyers overseas during the second half of this year, and they will begin to make deliveries in 2016. It is likely that the United States will be one of the first destinations for these trucks, according to the company.
The majority of the production for BYB takes place in China, but the company also has plans to invest in a solar panel factory in Brazil to the tune of $48 million.
According to information provided by Bloomberg, BYD is currently working with a number of banks for placement, including UBS, China International Capital, China Merchants Securities and Guosen Securities.