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China Longyuan public float soon, may raise HK$5b

By Mao Lijun and Zheng Lifei (China Daily)
Updated: 2009-06-18 08:09

China Longyuan Electric Power Group, the country's biggest wind power producer, is close to launching its long-planned share sale in Hong Kong, and the company is aiming to raise as much as HK$5 billion, people familiar with the situation said.

Longyuan, which accounts for over a quarter of the country's wind-power capacity, plans to complete the initial public offer (IPO) within this year.

"The IPO preparation is now in the final stages," one person who has direct knowledge of the matter said.

Longyuan, the renewable-energy arm of China Guodian Corp, one of the five State-owned power producers in China, is planning to raise as much as HK$5 billion from the share sale, the person said, without specifying how many shares the company planned to sell.

US bank Morgan Stanley is the lead underwriter of the share issue, the person said.

Related readings:  Longyuan Construction plans US$55.34m A-share IPO  Qianyuan Electric Power to launch US$12.08m IPO in Shenzhen  Shanghai Electric Power's IPO over-subscribed  Fuling Electric Power to launch US$29.45m IPO

Longyuan has submitted the environment impact assessment report (related to its H-share issuance) to the Ministry of Environment Protection for approval.

The period for seeking public feedback on the environment assessment ended yesterday, according to the environment watchdog's website, a move analysts said indicated the company was moving fast on its IPO process.

The proceeds from the planned share sale will be mainly used to expand its wind farm.

Longyuan had a wind power generation capacity of 2,630 mW in 2008, Huang Qun, its vice-president, told reporters earlier this month.

The Beijing-headquartered power firm plans to boost this to 6,000 mW by next year, and to 20,000 mW by 2020, Huang said. It aims to become one of the world's top three wind farm operators by 2012.

The installed wind power capacity at Longyuan amounted to 263 gW by the end of last year.

The company realized net profits of 500 million yuan last year, down sharply from 928 million yuan in 2007, as the slumping electricity demand and lowered power tariffs ate into earnings.

Longyuan, which operates almost 50 wind farms across the country, aims to chalk up 1 billion yuan in net profit this year, another top executive told China Energy News recently.

"The fund raising is expected to further cement Longyuan's position in the country's wind power sector as it will give the company financial muscle to expand its wind farms," said Luo Jie, an electricity analyst at Gold State Securities Co.

"The timing is also appropriate as the oil price has now climbed above $70 a barrel, and with the economy set to recover fast in the second half, the market sentiment will favor the power firm's share issuance," Luo said.

Longyuan, which said in 2007 that it planned to list in Hong Kong in 2008, scrapped the flotation plan later after the stock market crashed as a result of the global financial crisis.

China is planning to increase its wind power capacity fivefold to 100,000 mW by 2020 from at least 20,000 mW next year, Zhang Guobao, the country's top energy official said in May.