Commsat, a private satellite producer in Beijing, announced on Thursday it has raised 270 million yuan ($38 million) in its series B round of financing, recording the largest-ever fund raising effort in China's private satellite industry.

Major investors in this round are AVIC Capital Industrial Investment, a subsidiary of the State-owned defense conglomerate Aviation Industry Corp of China, and Wealth Capital, a Beijing-based private equity fund.

The investment will be used in the construction of a satellite manufacturing facility in Tangshan, Hebei province, and a production plant for satellite-based payloads in Yibin, Sichuan province, said a statement by Commsat, a prominent player in the country's private satellite sector.

Commsat CEO Xie Tao said that thanks to the inclusion of a satellite-based internet network in the government's new infrastructure stimulus package, the domestic satellite communication sector expects "explosive growth" in the next three to five years.

He said communication satellites weighing more than 100 kilograms will embrace a surge in demand, adding the market of ground terminals and applications will become bigger.

The larger and heavier a satellite is, the bigger the carrying capacity and it will have stronger capabilities.

"We have two major goals for this year－design and build internet communications satellites based on market demand and set up smart manufacturing lines," Xie said.

Yu Meng, an executive from AVIC Capital Industrial Investment, was quoted in the Commsat statement as saying that his company has been attracted by the firm's solid pool of technologies, sharp sense of business, leading status in the field, and its promising growth trend.

Chen Zhijian, a partner at Wealth Capital, said his firm has closely observed Commsat for three years, calling it one of the best players in the commercial space market.

He added that investors believe the satellite maker's investment in Yibin will extensively boost its research capability and commercial competitiveness.

Founded in June 2015 in Beijing, Commsat has placed eight small satellites designed and built on its own in orbit. Its revenue stood at nearly 100 million yuan in 2019 and the company has plans to develop and make four to five satellites this year.

Commsat President Peng Yuanyuan said the satellite manufacturing facility in Tangshan is under construction and scheduled to become operationally ready by the year's end. It has an annual production capacity of about 100 satellites with weights ranging from 50 to 500 kg.

The payload plant in Yibin, she explained, will take advantage of the local electronics industry and will focus on the research, development and making of ground-based internet terminals.