Two of China’s largest energy producers are planning to list the shares of their renewable energy business in Hong Kong within the year, Reuters and China Daily reported.
China Huaneng Group, China’s biggest power producer, and China Datang Corporation, also one of China’s five biggest energy companies, could raise as much as $2 billion through the I.P.O.’s, reports said.
Beijing-based China Huaneng reportedly plans to issue not more than 2.9 billion shares of its wind power unit, Huaneng New Energy Industrial Company, at 3 yuan to 4 yuan per share, to raise as much as 10 billion yuan ($1.47 billion).
Citing unnamed sources, Reuters said China International Capital Corporation, Goldman Sachs, Macquarie and Morgan Stanley are handling the stock offering for Huaneng.
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China Datang, meanwhile, aims to bring in at least $1 billion of new capital by floating shares of its wind and hydropower business, China Datang Corporation Renewable Power Company. Its I.P.O. is reportedly being handled by Deutsche Bank and UBS.
“I am optimistic about the earnings per share of Huaneng New Energy,” said Peng Quangang, an analyst of China’s power sector in China Merchants Securities, as quoted by China Daily. Mr. Peng said the country’s current power tariffs allow wind power producers to make profits.
In 2009, China’s National Development and Reform Commission set tariff rates ranging from 0.51 yuan to 0.61 yuan per kilowatt-hour for onshore wind power plants.
Reuters cited sources calculating that Datang’s I.P.O. will surpass Huaneng’s proceeds due to its larger assets.
Datang set up its renewable energy unit in March 2009 with 170 million yuan ($30 million) in registered capital to operate wind, solar and other renewable power facilities. It ranks as China’s second-largest wind power producer with 1,521 megawatts of wind assets by the end of 2008, according to the Chinese Wind Energy Association.
“Enterprises will become more market-oriented in making development strategies after going public, which would be beneficial to the healthy growth of the whole industry,” said Shi Pengfei, deputy president of the association.
Mr. Shi said profitability depends on factors such as wind resources and capability in successful connection to the grid.
Reports say that aside from the two companies, three other major Chinese power producers – China Huadian Corporation, China Guodian Corporation and China Power Investment Corporation – are also gearing up for the public listings of their new energy subsidiaries,.
China aims to reduce its carbon intensity by 40 percent to 45 percent in 2020 based on 2005 levels and boost clean energy use to contribute 15 percent of its total energy consumption.
