Dongfeng, French Government to Take Stakes in PSA?

PSA Peugeot Citroen aims to finalize a plan this year to raise €3 billion ($4.1 billion) by selling equal 20%-30% stakes in itself to the Chinese partner Dongfeng Motor Group Co. and the French government, Reuters says.

Rumors of an equity sale have been circulating for months. PSA confirmed last week it was looking for new partners but declined to comment on the Reuters report.

Unnamed sources tell the news service that the planned capital injection would be accomplished with a combination of new stock and a sale of some shares to the French government by the Peugeot family. The family, which currently holds 25.4% of the company and 38.1% of voting right, would relinquish control of PSA.

The carmaker's current market value is about €4.4 billion ($6 billion). Reuters's sources say the cash injection would be worth 40% of the new share capital.

The issue would dilute the 7% stake in PSA acquired by General Motors Co. early last year. GM said previously it has no intention of investing more money in the French company.

The funding plan would include an expansion of PSA's partnership with Dongfeng Motor Corp. in China with more models, greater technology sharing and a growth strategy that aims at other markets in Asia, according to Reuters.