(Yicai) Dec. 20 -- GCL Technology Holdings' stock dropped after the Chinese photovoltaic materials giant said it had completed a private placement of shares and unveiled plans to issue convertible bonds, potentially securing around USD700 million in total.

Shares of GCL [HKG: 3800] closed 2.7 percent lower at HKD1.10 (14 US cents) apiece today. The benchmark Hang Seng Index ended slightly changed.

GCL issued 1.56 billion shares priced at HKD1 each in the private placement, bringing in about USD200.8 million, the Suzhou-based firm announced yesterday, adding that it intends to issue USD500 million of convertible bonds. The moves were warmly received by foreign capital.

A private placement, usually done to raise capital for specific corporate purposes, can depress a listed firm's shares through equity dilution, as the ownership percentage and earnings per share of existing shareholders fall if they are not involved in the placement.

The cutting-edge technology and green capabilities to reduce the carbon footprint of China's PV industry are increasingly recognized by foreign capital, said Zhu Gongshan, chairman of GCL. Subscribers for the company's private placement and convertible bonds are mainly overseas sovereign wealth funds and world-leading family funds, he added.

The proceeds from the private placement of shares will be used for capital expenditures and general operation purposes, GCL noted, without disclosing the use of the proceeds from the convertible bonds.

The PV sector is experiencing a cycle of difficult financing and intensified competition, an industry researcher noted. The strong endorsement and additional investment from Chinese and foreign capital for GCL indicate that the sector's core tech continues to be favored by the capital markets, the person added.

Kunshan GCL Optoelectronic Materials, GCL's core perovskite unit, announced it banked CNY500 million (USD68.5 million) from a Series C1 financing round earlier this month. The fundraiser was led by Goldstone Investment, with Kunshan High Technology Group, HongShan Capital Group, and Hanyang Capital also taking part.

Editor: Martin Kadiev