The founder and chairman of Hanergy Thin Film, who became one of China’s richest men on paper before shares in his solar power group plunged in May,…

The founder and chairman of Hanergy Thin Film, who became one of China’s richest men on paper before shares in his solar power group plunged in May, has sold a 6 per cent stake in the company at a 95 per cent discount to the last traded price

Li Hejun agreed to sell the Hong Kong-listed shares for Rmb0.18 (US$0.03) each, according to regulatory filings, reducing his ownership to 74.75 per cent of the troubled company

That transaction would give the company an equity valuation of US$1.16bn, far below the $21bn market capitalisation when trading in its shares was suspended in May after they sank 47 per cent in one day

Hong Kong’s Securities and Futures Commission is investigating the nature of HTF’s financial ties to Hanergy Group, its privately held parent company, which accounted for the majority of the subsidiary’s sales

This year the Financial Times ran a series of articles about Hanergy Group and HTF, raising questions over their business model and the manner in which the latter’s share price had surged in value — which briefly propelled Mr Li to the top of the China rich list compiled by Hurun

The company’s rapid rise and fall came to symbolise the turbulent nature of the country’s stock market this year and has underlined the challenges of investing in Chinese companies, where ownership structures are often complex and disclosure standards lacking

In a speech to staff in September, Mr Li blamed short sellers for the “disaster” that has befallen HTF, which at its peak was worth almost $40bn

“The suspension has been a disaster, for the listed companies, the parent group, for small and medium investors as well as for myself,” he said. “The only winners are the short-selling institutions and short traders who made great profit.”

HTF swung to a net loss for the first half of the year. It has lost a residential solar power contract with Ikea and scrapped a $585m deal between a subsidiary and its mainland parent

The company last week said its financial controller, Li Guangmin, had resigned

A unit of the listed company is also facing legal action in a dispute over HK$1.7m ($223,000) in office rent and management fees in Hong Kong