China's largest carmaker outside state control rose 19 percent to HK$2.13, the highest close since March 2000. GS Capital Partners VI Fund LP will own 15.1 percent of Geely should it convert the bonds and exercise the warrants, according to a stock exchange statement.

Geely, whose parent is considering a bid for Volvo Car Corp., said it may use some of the funds from the note sale for acquisitions. Warren Buffett has also invested in Chinese carmaker BYD Co. as the nation's economic growth and government stimulus measures put China on course to pass the U.S. as the world's biggest auto market.

“Geely has better growth prospects than other publicly traded automakers in Hong Kong, with good returns to investors and a very experienced management team,” said Rebecca Tang, an analyst at CIMB-GK Securities HK Ltd. “There is still room for the stock to rise.”

The automaker has more than tripled this year, compared with the benchmark Hang Seng Index's 50 percent gain. The automaker last traded on Sept. 15 before today.

Paper Profit

The Goldman fund can convert its bonds into 908.4 million new shares at HK$1.90 apiece. That means it is already set for a HK$209 million paper profit. The bonds pay 3 percent per annum in interest. New shares created within the first 12 months of the bonds' yet-to-be-set issue date will be subject to a 12- month lock-up period, according to the statement.

The warrants can be converted into 299.5 million new shares at an exercise price of HK$2.30 each.

Geely intends to work with the Goldman fund “to further strengthen our financial management, operational efficiency and corporate governance practices,” it said in an e-mailed statement.

Geely Auto more than doubled first-half profit to 595.9 million yuan (US$87 million) after raising its stakes in carmaking ventures and adding larger, pricier models. Vehicle sales rose 21 percent. The company was ranked ninth among China carmakers overall last year in terms of sales. It's slipped out of the top 10 this year.

Nationwide auto sales may jump 28 percent this year to 12 million, according to a state forecast, as government subsidies and tax cuts spur demand. U.S. vehicles sales will likely be around 10.5 million, according to General Motors Co., the nation's biggest carmaker.

BYD, Buffett

BYD, the maker of the F3, the bestselling car in China this year, has jumped more than fivefold since agreeing to sell a 10 percent stake to a Berkshire Hathaway Inc. unit last year. The Goldman backing may also boost Geely's shares.

“There's a psychological impact,” said Vivien Chan, an analyst with SinoPac Securities Asia Ltd. “A major fund investing in Geely will send a signal that the market has a positive expectation.”

Geely's parent Geely Holding Group Co. is looking at an offer for Ford Motor Co.'s Volvo unit, possibly in partnership with a Chinese state investment company, Geely Auto Chief Executive Officer Gui Shengyue said Sept. 8.

Overseas Push

A Volvo deal may help Geely meet founder Li Shufu's target of getting 66 percent of sales from overseas by 2015 compared with 5 percent in the first half. Geely earlier this year unveiled the EC718 sedan, its first model specifically designed for Europe. The car, priced from 80,000 yuan to 120,000 yuan domestically, still needs to win certification to be sold in Europe.

Geely has also bought a stake in Manganese Bronze Holdings Plc and set up a Shanghai venture with the London-cab maker that is shipping cars to countries including Saudi Arabia, Turkey and Spain. The company purchased the key assets of Australian gearbox maker Drivetrain Systems International earlier this year, gaining technology for making automatic transmissions.