?A China National Nuclear Corp stand at an industrial expo in Beijing. China National Nuclear Power Co, a CNNC subsidiary, was given approval on Wednesday to launch an initial public offering. [Photo/IC]

China National Nuclear Power Co, one of the country's three State-owned nuclear power developers, is a step closer to raising more than 16 billion yuan ($2.6 billion) in an initial public offering.

Plan by the nuclear power company, a subsidiary of China National Nuclear Corp, to sell up to 3.65 billion shares was approved on Wednesday by the China Securities Regulatory Commission, the country's securities regulatory body.

About 9.2 billion yuan of the funds will be used in building and operating 10 coastal nuclear power stations in Jiangsu, Zhejiang, Fujian and Hainan provinces, with the rest used as working capital as it expands, said officials.

The company first filed its IPO application to the securities authorities in 2012, but the request was shelved as China tightened its grip on large-cap stock flotations worth over 5 billion yuan.

Experts said the long-awaited public offering of shares in a nuclear-focused company has generated a lot of interest, but investors are also being advised to be cautious about the issue, which is expected to become the largest A-share floatation in four years.

Li Daxiao, chief economist at Yingda Securities Co Ltd, said that an upcoming wave of listings is likely to have a negative impact on the market, and that current valuations have not factored in this "IPO effect".

Li said that it seems investors are not fully prepared for what could become a huge amount of new shares flooding the market, as the country pushes toward a registration-based system for new offerings, which will no longer require government approval.

"Given the current market frenzy, prices of new shares could soar on the day they debut. But the risk is also growing that the valuations of some companies have risen too high," he said.

Conventional market wisdom is that a wave of IPOs, especially of large-caps, would cause a decline in the market as they drain liquidity.

Others, however, are enthusiastic that the nuclear divestment, in a key high-tech sector, will be looked on favorably as offering high growth potential.

China has unveiled plans to build more nuclear power plants as part of its efforts to increase non-fossil fuel sources of energy.

The country is expected to raise installed nuclear capacity from 14.6 gigawatts in 2013 to 50 GW by the end of 2017. Among all types of clean energy, however, solar power is expected to see the most rapid growth.

CNNP is not the only upcoming energy opportunity which could tempt investors to cash in on the huge growth prospects for the sector.

Last year CGN Power Co Ltd, China's largest nuclear plant operator in terms of installed capacity, launched an IPO worth $3.2 billion, which made it Hong Kong's largest in 2014.