China's Geely Automobile Holdings, whose parent has been linked with both Volvo and Opel, said on Wednesday it would raise HK$2.59 billion ($334 million) by issuing convertible bonds and warrants to an affiliate of Goldman Sachs, sending its shares up by a quarter.

Geely, which has said its parent is considering bidding for Ford's Swedish car brand Volvo, said the proceeds will be used to fund capital expenditure and potential acquisitions, as well as for general working capital. It gave no details.

The addition of Goldman as a major investor could help China's 10th largest vehicle maker's aspirations on the global stage, said Yi Junfeng, an analyst with Changjiang Securities.

"It's a wise move for Geely as it can use the money to build up capacity and free up capital for its parent, which has publicly announced its interest in Volvo," said Yi.

Geely Group Holdings has also approached Magna about a potential production partnership on GM's European brand Opel, a source familiar with the matter told Reuters last week.

For Goldman, the bonds could give the investment bank exposure to China's fast growing auto market, the world's largest.

Goldman could end up with 15.1 percent of the Hong Kong-listed Geely if it fully converts the bonds and warrants, the Chinese carmaker said in a statement.

Shares of Geely spiked to a record high of HK$2.25 at the open on Wednesday, resuming trading after a week-long suspension while it finalised the sale. It last traded up 22 percent at HK$2.18 and has more than tripled this year, beating a 50 percent gain on the broader market.

BUILDING CAPACITY

The fund-raising will allow Geely to buy new car plants being developed by its parent thus free up capital from its parent for any possible acquisitions.

Geely, which competes against Chery Automobile and other local brands, has said it plans to nearly double its car-making capacity to 685,000 units a year in the next few years.

Hangzhou-based Geely posted 35 percent sales growth in the first eight months of the year to 185,000 units, equivalent to 74 percent of its full-year target of 250,000.

Geely said it will issue HK$1.897 billion ($245 million) worth of 3 percent convertible bonds due 2014 to GS Capital Partners VI Fund L.P., an affiliate of Goldman Sachs.

The bonds will be attached with 299.53 million warrants which each has a right to convert into Geely shares at HK$2.30 per share.

The bonds are convertible into 998.42 million Geely shares at a conversion price of HK$1.90 each, representing a 6.1 percent premium over the previous close prior to a trading suspension.

Another HK-listed automaker has attracted other high-profile investors.

U.S. billionaire Warren Buffett's Berkshire Hathaway Inc agreed to invest $230 million for about 10 percent of battery and electric car maker BYD Co Ltd last year.

The investment has realised a $1.8 billion paper profit for Buffett.