Chinese cement plant gets $40m growth investment

Sichuan Zhiquan Special Cement has closed a convertible preferred stock financing with investors that include Merrill Lynch, Lunar Capital and Eos.

Sichuan Zhiquan Special Cement has obtained $40 million in financing from Merrill Lynch, China-focused private equity firm Lunar Capital Management and Eos Asia Investments, an investment manager specialising in Chinese SMEs.

Zhiquan owns the only dry rotary cement plant in Chengdu, China and has recently obtained approval to upgrade and expand production from two million tons per annum to 10 million tons per annum, until the end of 2010.

“Zhiquan's existing plants are situated in perfect locations to supply both the earthquake reconstruction and hydroelectric build-out that is happening in the region. The plant expansions will help us meet the severe shortage of cement in these regions”, said Zhiquan’s founder and chairman Chen Zhiquan, in a statement.

Merrill Lynch and Lunar Capital have purchased an undisclosed proportion of the convertible preferred shares offered. Harvest Finance, an affiliate of Lunar capital, led a bridge financing to accelerate the company’s growth efforts. Eos arranged the financing and is preparing the company for a potential IPO overseas in 2010.

Lunar Capital is located in Beijing, Chengdu, Hong Kong, Kunming and Shanghai.

Established in 1992, Eos targets investments between $25 million and $150 million. It has offices in both US and China.