SHANDONG Haihua Group (stock code: 000822) has signed an initial deal to form a venture with US-based private equity firm Carlyle Group, according to the Chinese chemical maker's listed unit.

Haihua Group will take a controlling stake in the venture, into which it will inject assets including its 49 percent stake in its listed unit, Shandong Haihua Co. Carlyle will put cash into the venture.

In a statement filed with the Shenzhen Stock Exchange yesterday, Haihua failed to provide financial or production details of the proposed venture, but the company said a preliminary memorandum of understanding on the venture will be effective within one month until July 5.

Should the deal be finalized, the controlling shareholder of listed Haihua would be changed while the ultimate parent of the listed unit would still remain Haihua Group, according to the company statement.

Haihua and Carlyle wouldn't comment further.

Haihua shares soared 10 percent, the daily limit, to 15.74 yuan (US$2.10) yesterday and have more than tripled so far this year.

Based in Weifang, eastern Shandong Province, Haihua makes chemicals including soda ash.

Carlyle has been active in investing in Chinese industries over the past few years.