Darco Water Technologies on Monday said strategic investor Robert Wang Zhi will purchase 29.5 percent stake in water treatment specialist for up to S$19.7 million.
Shares in the company jumped as much as 17 percent to S$0.66 on the Singapore Exchange.
Wang Zhi, who is chairman of Hong Kong-based Future Investment Enterprise, will buy between 23.99 million and 30.3 million of new Darco shares at 65 Singapore cents apiece, the company said in a regulatory filing.
The placement price represents a 15 percent premium from Darco's weighted average price share price of 56.5 Singapore cents as at October 20, when the agreement was signed.
Wang Zi would also grant a loan of S$4.0 million to the company, which will be used for the working capital of the group's subsidiary, Wuhan Kaidi Water Services Co, the company said.
Darco said it intends to utilize the net proceeds to finance the business expansion of the company and its subsidiaries, improve its cash flow, increase working capital, and for general corporate purposes.
"The fresh funding from the placement and loan arrangement will allow the Group to accelerate organic growth and strategic acquisitions," Thye Kim Meng, CEO of Darco Water said in a statement.
"In addition, the potential asset injection will also allow the Group to build up its recurring income stream which will further enhance shareholder value."