China’s GSR close to sealing $1b deal for Nissan battery venture

GSR near closing $1b deal to buy Nissan battery unit
The 80 KW AC Synchronous Electric motor from a 2011 Nissan Leaf Zero Emission Electric car is displayed in Franklin, Tennessee, U.S. on Tuesday, Oct. 26, 2010. Photographer: Mark Elias/Bloomberg

GSR Capital, a Chinese private equity firm with backing from the Hubei provincial government, is nearing a deal to acquire control of a Nissan Motor Co. rechargeable battery unit for about $1 billion, according to people with knowledge of the matter.

The firm is in advanced talks with Nissan about buying a stake in Automotive Energy Supply Corp., which makes the lithium-ion cells for the Japanese company’s Leaf electric car, the people said. The parties aim to announce an agreement within the next two weeks, said the people, who asked not to be identified because the discussions are confidential. The Hubei government-backed Yangtze River Industry Fund is contributing at least 20 per cent of the GSR Capital fund doing the AESC deal, the people said.

Yokohama, Japan-based Nissan owns 51 per cent of AESC, while NEC Corp. holds the remainder. Shares of NEC rose as much as 3.2 percent in Friday trading, the most in a month, and were up 2.9 percent to 287 yen at 10:59 a.m. in Tokyo.

GSR Capital sees value in building an independent battery supplier to multiple automakers and is considering moving some of AESC’s manufacturing to Hubei, the people said. The central Chinese province — home to the Three Gorges Dam and the nation’s second-largest carmaker, Dongfeng Motor Group Co. — recently earmarked 547 billion yuan ($80 billion) for investments in areas like clean energy to modernize its economy.

Lighting Deals

Sizeable Chinese acquisitions of Japanese assets are rare, with transactions this year totaling just $11.4 million, according to data compiled by Bloomberg. Last year, Japan attracted less than $700 million of deals from firms based in Asia’s biggest economy, the data show.

There’s no certainty the talks will lead to a transaction, and another buyer could still emerge. Nissan said in an emailed statement it’s committed to producing the best electric vehicle solutions and continually evaluates its business strategy in pursuit of optimal products and business structure. Representatives for GSR and NEC declined to comment, while the Yangtze River Industry Fund didn’t respond to emailed queries sent to its media department.

GSR Capital is led by Chairman Sonny Wu, who has fronted several attempts at multibillion-dollar overseas purchases. Wu pursued acquisitions of Osram Licht AG and Royal Philips NV’s lighting unit last year, people familiar with the matter said earlier, though in both cases the discussions didn’t lead to a transaction. Another deal he spearheaded, the $2.8 billion takeover of the Philips Lumileds business by his GO Scale Capital fund, was blocked by a U.S. security panel.

Wu’s funds have invested in Lattice Power Corp., which is developing cheaper and more efficient LED chips, and Chinese electric-car maker Xin Da Yang. GSR Ventures is also a backer of Boston Power, which builds lithium-ion batteries for electric cars and buses.

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Bloomberg