ZTE Corp said it was looking to raise 11.51 billion yuan ($1.7 billion) from a private placement of A shares, and that it plans to use the proceeds for research and development (R&D) of 5G networks as well as working capital.

The Chinese telecom equipment maker said on Thursday it planned to issue 381.098 million A shares, or 8.27% of the total issued share capital on completion of the deal, to independent third party investors at 30.21 yuan apiece.

That represents a discount of 18.2% to ZTE's A-share closing price of 36.92 yuan in Shenzhen on Wednesday. The A shares, which are subject to a lock-up period of 12 months from the date of listing, will be issued to 10 independent professional or institutional investors in China.

None of the subscribers will become a substantial shareholder upon completion of the share sale, the company said, without providing further details. The company had not responded to an email request for comment on details and identity of the investors.

"We believe the successful fund raising will remove a key overhang for the stock, and would give investors more confidence in ZTE's R&D efforts and thus potential share gain in 5G," brokerage Jefferies said in a research note.

"Our fundamental view remains negative, but near-term stock price could have support," Jefferies said, adding it worried about margin pressure and market share pressure on 5G.