(Yicai Global) Oct. 19 -- Contemporary Amperex Technology, the world’s largest battery maker, has defended a plan to raise CNY58.2 billion (USD9 billion) through the biggest private placement of shares by a firm listed in the Chinese mainland after investors raised doubts over the large size of the fundraiser.

The private placement is not excessive, CATL said in a statement yesterday, adding that it a necessary forward-looking positioning because the company’s new battery capacity will take a long time to build.

CATL announced on Aug. 12 that it plans to place 232.9 million shares with institutional investors to fund six projects that would more than double its capacity to make electric car batteries. But investors questioned the size of the private placement as the Ningde, Fujian province-based company has sufficient funds. Later, the Shenzhen Stock Exchange sent an inquiry letter to CATL requesting further details.

“CATL is a global new energy innovative technology firm, so it needs to continuously advance innovation in power battery material systems, system structures, extreme manufacturing, and business models, which also require huge funding,” it said.

Shares of CATL [SHE:300750], China’s second-most valuable listed company, closed 0.7 percent lower today at CNY590.60 (USD92.19) each, after earlier swinging between a gain of as much as 3.4 percent and a drop of 1.7 percent.

CATL’s existing funds are not enough for its future development as the industry is growing, it said. The firm’s debt-to-assets ratio widened to 63.4 percent at the end of June from 52.4 percent in 2018, and it has used up the money it has raised, CATL added.

The Tesla supplier said it needs huge funds to expand capacity and invest in research and development and the industrial chain. It has invested CNY110 billion (USD17.2 billion) in building projects and CNY9.8 billion (USD1.5 billion) in upstream and downstream industrial chains from last year to June, and CNY2.8 billion in R&D in the first half of this year.

Prices of cathode materials and electrolytes jumped in the first half due to the rising costs of commodities such as lithium, nickel, and cobalt, as well as raw chemical materials, affecting the firm’s gross profit margin, CATL added.

Editor: Futura Costaglione