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Ceres Power announces partnership with China’s Weichai Power and £17mln potential equity investment

The AIM-listed firm said this agreement provides Ceres Power with access to the Chinese market, the world’s fastest-growing market for fuel cells

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The company said the agreement also includes a potential initial £17mln equity investment and further equity investment of £23.2mln

Ceres Power Holdings PLC (LON:CWR) shares jumped higher on Wednesday as the fuel cells developer announced a strategic collaboration with Weichai Power, one of China’s leading automobile and equipment manufacturing companies, including a potential initial equity investment worth £17mln.

The AIM-listed firm said this agreement provides Ceres Power with access to the Chinese market, the world’s fastest-growing market for fuel cells.

READ: Ceres Power expects strong revenue growth trend to continue

It added that initial plans are for Ceres Power and Weichai to jointly develop and launch a SOFC fuel cell range extender system for China’s fast-growing electric powered bus market.

Ceres Power said in a statement that the agreement potentially provides significant staged revenues to the company through engineering services and technology transfer, licence and royalty payments and a longer-term share in the profits from a proposed manufacturing joint venture.

The group said the agreement also includes a potential initial £17mln equity investment by Weichai in Ceres Power and potential further equity investment of £23.2mln, which is triggered on signing further commercial agreements before 30 November 2018, both subject to approval by the shareholders of the company and by provincial governmental authorities.

WATCH: Ceres Power secures partnership with Chinese giant Weichai Power

Phil Caldwell, Ceres Power's CEO, said: “This is a key milestone for Ceres Power as we continue to deliver on our strategic plan of licensing our technology to a leading OEM which if successful could lead to a high-volume manufacturing JV for the Chinese market with a very strong partner."

In late morning trading, Ceres Power shares gained 7.8% at 13.8p.

German broker Berenberg has reportedly raised its target price for Ceres Power to 20p from 15p, and reiterated a 'buy' rating on the stock.

 -- Adds share price, broker change --

Quick facts: Ceres Power Holdings PLC

Price: 588 GBX

Market: LSE
Market Cap: £1.01 billion

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