Jiangsu Lopal Tech (SHA:603906, HKG:2465) said its non-wholly owned subsidiary Changzhou Liyuan attracted a 440 million yuan investment, diluting its stake in the business, according to a Monday filing with the Hong Kong bourse.

Shares of the automotive specialty chemicals company fell nearly 2% in Hong Kong and 3% in Shanghai Tuesday morning.

Jinsha Industrial Investment will inject fresh capital in Changzhou Liyuan, a producer of lithium iron phosphate cathode materials, in exchange for 6.83% of the business.

The transaction will dilute Lopal Tech's stake to 61.88% from 66.42%, although Changzhou Liyuan will remain a Lopal Tech subsidiary and will still be consolidated in its accounts, the firm said.

The funds are earmarked for a 120,000-ton high-tap density lithium iron phosphate production base in Jintan, Jiangsu.