China Investment Corporation (CIC), the nation's sovereign wealth fund, would spend 5.5 billion HK dollars (709.69 million US dollars) to buy about 20 percent stake in a Hong Kong-based new energy company, said a report posted on CIC's website Thursday.

The company said it had entered into a binding framework agreement with GCL-Poly Energy Holdings Ltd (GCL-Poly) , and would subscribe for 3.108 billion new shares at a price of 1.79 HK dollars per share.

The two sides also agreed to set up a joint venture, or JV Company, to invest and develop photovoltaic or other solar energy projects with an initial capital of 500 million US dollars.

CIC will hold 49 percent shares of the joint-venture, and GCL-Poly, 51 percent.

"This transaction marks an important step for GCL-Poly. With our industry expertise in the renewable and clean energy business and our newly gained financial flexibility, the deal will strengthen our financial position and enhance the company's leading role in the renewable energy industry," said Zhu Gongshan, the company's chairman.

GCL-Poly said in a statement that it intended to use the net proceeds raised from the subscription for general working capital, repayment of borrowings and exploration of new business opportunities, including investment in and development of the joint-venture company.

Founded in 2006, GCL-Poly, is the country's largest polysilicon producer and got listed on the Hong Kong Stock Exchange in 2007.

Shares of GCL-Poly surged 12.21 percent to close at 2.59 HK dollars at the midday while the Hang Seng index dipped 0.53 percent.