(Yicai) April 9 -- Zhongheng Electric’s shares rose to their daily limit after the Chinese supplier of data center power systems said Contemporary Amperex Technology will invest CNY4.1 billion (USD600 million) for a stake in its parent company and link arms on electrical equipment, including computing power infrastructure.

Zhongheng Electric [SHE: 002364] closed up 10 percent at CNY31.93 (USD4.67) a share in Shenzhen today, taking the stock’s advance to 21 percent so far this year. CATL [SHE: 300750] fell 0.3 percent to CNY389.99 (USD57.09).

CATL will invest in Zhongheng Technology Investment via a capital increase, using its 99.7 percent stake in Times Tianyuan Technology, valued at CNY1.2 billion (USD175.6 million), along with around CNY2.9 billion in cash, Hangzhou-based Zhongheng Electric announced late yesterday.

Times Tianyuan is a leading supplier of production equipment for lithium batteries and new energy power systems, including lithium battery assembly gear, power conversion systems, and charging and swapping equipment.

After the deal is completed, CATL will own 49 percent of the target company and nominate one of its director and a deputy general manager. The combined interest of controlling shareholders Zhu Guoding and his wife will fall to 51 percent.

Based on Zhongheng Technology’s 35.6 percent stake in Zhongheng Electric, CATL will indirectly hold 17.4 percent of the shares, becoming its second-largest shareholder.

After the transaction is concluded, the pair plan to work together on green information and communications technology infrastructure, electric vehicle battery charging and swapping equipment, as well as supporting power systems, and specialized power gear and power supply systems for computing centers, data centers, and artificial intelligence clusters.

The deal marks a push downstream in the new energy supply chain by CATL, following its earlier bets on upstream raw material suppliers such as Canmax Technologies and Fulin Precision. By extending its reach into core equipment for energy infrastructure, which underpins the digital economy, the Ningde-based company seeks to enhance its presence in the new power systems and digital energy areas.

Zhongheng Electric is a key supplier of high-voltage direct current power equipment and data center energy solutions for Chinese internet giants such as Alibaba Group Holding and Tencent Holdings.

Last year, Nvidia tapped the firm as a key partner for its HVDC power solutions, focusing on providing highly reliable, low power usage effectiveness full-scenario power supply solutions for AI computing centers.

Editor: Martin Kadiev