Auto maker Zhejiang Geely said on Thursday it was teaming up with Chinese regional asset manager Daqing State Asset Operation Co in its planned $1.8 billion takeover of Ford Motor Co's Volvo Cars unit.
The Daqing investment group would become a minority owner of the company that is set to buy Sweden-based Volvo Car Corp in what would be China's biggest ever overseas auto purchase, a Geely spokesman said.
The exact size of the stake taken by Daqing and financing issues would only be unveiled once the deal closed, said Anders Fogel, Swedish spokesman for Geely, though Zhejiang Geely would be Volvo's controlling shareholder.
Zhejiang Geely Holding Group, China's largest private carmaker and parent of Geely Automobile, signed a deal with Ford in March to buy Volvo Cars in a deal seen as a milestone in the emergence of China as a auto sector powerhouse.
The Chinese entity manages state-owned assets in the Daqing region in northern China and news of its involvement comes amid speculation over the location of a new plant to build Volvo cars in China with an annual capacity of 300,000 units.
Fogel declined comment on whether the financing came with any requirements to build the new plant in the Daqing province.
This is a regional fund ... and they make investments in various cases that they believe in. This has been one of the interested parties we've talked to and they have felt it was interesting and see a big upside to the deal, he said.
Hong Kong-listed Geely Automobile said earlier this year it had no plans to raise money to help finance the purchase by its parent of the Sweden-based carmaker, which last made a full-year profit in 2005.
The $1.8 billion deal is planned to close in the third quarter.
A new Chinese plant, with a capacity nearly matching Volvo's entire 2009 output, would help boost the Swedish premium brand in the fast-growing Chinese market, which last year overtook the United States as the world's biggest car market.
The Swedish carmaker has bled cash in recent years and cut thousands of jobs in its quest to regain profitability, though its U.S. parent said it had swung to a $49 million operating profit in the first quarter.
(Editing by David Holmes)