China XD Plastics, which supplies the auto industry, announced Morgan Stanley Private Equity Asia (MSPEA) had agreed to make a US$100m equity investment for a “significant minority ownership stake” in the company, subject to the usual conditions.

The investment will help China XD Plastics to expand and further upgrade its production capabilities, the supplier said.

MSPEA will purchase redeemable convertible preferred shares at an aggregate purchase price of $100m. The shares are convertible into common stock at an initial conversion price of $6.25 per share.

MSPEA will designate two members to be elected to the XD board taking the number from seven to nine. Six of the nine directors will be considered independent under Securities and Exchange Commission and Nasdaq rules.

Jie Han, chairman and CEO of China XD Plastics, said: “This investment will enable us to accelerate our domestic capacity expansion and production line upgrade plans and invest in developing new products to better satisfy the demand for our products in the market.”