Rouse and Lusheng advise Phinergy in landmark deal to produce aluminium-air batteries in China

Rouse and its network firm in China, Lusheng Law, have advised Phinergy Ltd of Israel

Rouse and its network firm in China, Lusheng Law, have advised Phinergy Ltd of Israel in a deal with Yunnan Aluminium Co Ltd and Shanghai Zuoyong New Energy Technology Co on the formation of a joint venture in China to manufacture aluminium-air batteries. The deal represents a world-first commercialization of Phinergy's aluminum-air batteries, and reflects the leading role that China plays globally in the development of batteries for new energy vehicles and other applications.

The deal, which was publicly disclosed by Yunnan Aluminium (Shenzhen stock code YLGF 000807) on 28 February 2018, involves formation of a Chinese equity joint venture, Phinergy Chuangneng Metal-Air Battery Co, based in Kunming, Yunnan, with a registered capital of RMB 813,815,300 (approx. USD 128M). The transaction involves three parties - Phinergy, holding 32%, a pioneer and leader in energy technologies especially aluminum-air batteries, Yunnan Aluminium, holding 32%, a state-owned aluminium producer, and Shanghai Zuoyong, a financial investor in new energy technologies holding 36%. 

Rouse veteran Chris Bailey, who leads the firm's Technology Consulting practice in China, and Lusheng partner Jin Ling, who leads Lusheng's IP Transactions team, along with Lusheng Senior Associate Jacqueline Zhao, represented Phinergy in drafting and negotiation of the core agreements in collaboration with Phinergy's senior management and Israeli counsel. Jin Ling, who has previously served in the Legislative Affairs Office of the State Council, China's highest legislative body, has particular experience in navigating technology transactions with state-owned enterprises, which are subject to more official oversight. The deal was further complicated by the multi-stage and cross-border transactions involved.

Chris Bailey commented "this was an exciting deal to be involved in, being groundbreaking technology that will be launched first in China. The parties to the JV all had a compelling strategic rationale to enter into the deal, and the parties moved quickly, but launching brand new technology always carries risks, so the negotiations had to overcome the inevitable trust barriers for all parties. We are seeing a new wave of technology joint ventures in China and this deal serves as a good model for how it should be done."

Jin Ling commented “Although I have assisted clients in numerous cross-border deals in China over the past 18 years, I found this experience very rewarding, in particular due to the unique structure of the deal, the background of the parties and particularly the insight into Israeli culture.”