A Cloudy Offer From A Chinese Solar Entrepreneur

To get rich is glorious in China nowadays. Scientists are no exception.

A top home-grown inventor, 41-year-old Ma Xin, is currently engineering a reverse takeover of a small Singapore-listed investment company, Rowsley, in a deal worth 2.7 billion Singapore dollars ($1.6 billion) that would bring a small part of his high-tech corporate empire, Sinocome Group, to the international capital markets.

Ma is conducting the takeover through an obscure solar panel production company called Perfect Field that he founded last year.

Ma says the company will be a disruptive player in the energy field, with technology that is competitive with coal power — without any government subsidies.

However, the offer has caused unease among some Singaporean investors. Perfect Field has not yet sold any solar panels — it hasn't even finished building a factory. It's booked a mere 28 million yuan in revenue ($3.6 million) for consultancy work.

Yet Ma is guaranteeing Rowsley investors $300 million a year in profits for the three fiscal years through June 30, 2010. If he does not deliver, he has agreed to forfeit the 92% stake in Rowsley he would receive under the deal.

Ma became well-known in China when he was appointed chief public security adviser to the 2008 Beijing Olympics Games, a role that he secured mainly on the strength of developing China's first computerized facial recognition security system. His company claims the technology is about two years ahead of comparable devices in the U.S. and Europe. His system will be used in the 2008 Beijing Olympics.

Sinocome's success in commercializing its facial recognition technology in a range of applications has made Xin wealthy. The company claimed sales of 5 billion yuan ($646 million) in 2006 of facial recognition products.

Founded in 1996, Beijing-based Sinocome does not seem to be in need of financing, as most of its interests in more than 30 affiliated companies receive financial support from Chinese governments at different levels through joint ventures.

However, Sinocome says that Perfect Field is one of very few of its subsidiaries that is fully owned and does not receive backing from the government, which is why it is seeking to tap the international equity markets through a reverse takeover.

Under the deal, Rowsley would buy Perfect Field for $1.6 billion and issue Ma shares that would give him a 92% stake in the Singaporean company.

Ma plans for Perfect Field to churn out photovoltaic solar cells based on amorphous silicon technology, a second-generation technique that requires only a thin film of silicon on a glass substrate, making it substantially cheaper to produce than the prevalent, thicker crystalline silicon technology.

Most Chinese solar panel companies, including industry leader Suntech Power, make crystalline silicon solar cells.

The rap on amorphous silicon has been that it is less efficient at collecting solar energy, requiring a larger surface area than crystalline panels. However, Ma claims that Perfect Field has raised the efficiency of its panels to near that of crystalline silicon.

Perfect Field plans to achieve a production capacity of 100 megawatts in 2007 and 500 MW by 2009.

While the venture appears speculative, Rowsley's current investments, which include interests in a paper recycler and a ceramic tile maker, are pedestrian compared to the potential of the red-hot alternative energy sector.

Described by an employee as reticent and polite, Ma honed his teeth at China's two most influential scientific institutions, obtaining his PhD from the Chinese Academy of Science and doing post-doctoral work at Beijing Tsinghua University, the alma mater of most of its current leaders, including current President Hu Jintao.

He continues to play an instrumental role in research and development and is said to leave the business side largely to professional managers.

He is active politically, serving as a consultant for the mayor of Beijing and a member of the Science and Technology Committee of the Military Command Association of the People's Liberation Army, as well as the Standards Committee of the Ministry of Public Security.
Sinocome says on its Web site that it has total production assets worth 4 billion yuan ($517 million) and its trademark value estimated at 1 billion yuan ($129 million), but a company manager said these figures were posted before Morgan Stanley appraised its fast-growing solar energy production center in Jilin last year to be worth close to $4.8 billion.

Perfect Field is just the latest solar energy venture for Sinocome, which started in 2000 with the production of solar-powered street lamps and has recently won Chinese foreign aid contracts in such African countries as Kenya and Uganda.

Its solar energy products have also found markets in Peru, Costa Rica, Mexico and Venezuela.
Groupwide, Sinocome says it intends to expand its production capacity for solar panels to nearly 2000 megawatts in the next three years, which would transform it into an industry leader.
To help with its international expansion, Ma has retained American marketing guru Philip Kotler as a consultant.

Sinocome says that its solar panels will be incorporated in the Beijing Olympic stadium, dubbed the "Nest."