China’s Longyuan Power Group, Asia’s largest producer of wind-generated electricity, will raise as much as HK$17.5bn ($2.2bn) in its upcoming initial public offering, making it the third-largest renewables IPO of the past decade.
Beijing-based Longyuan is the renewables arm of state-controlled China Guodian, one of the country’s ‘big five’ electrical utilities. Longyuan’s 2.9 gigawatts (GW) of installed wind capacity account for nearly one quarter of China’s total, and make it the fifth-largest generator in the world.
Details of Longyuan’s upcoming IPO were first leaked to the press months ago, with the company initially reported to be seeking HK$5bn. Since then, however, the firm has been regularly upping the figure, as it looks to take advantage of thawing global credit markets and the ever-brighter prospects for Chinese renewables.
Longyuan now intends to sell more than 2.1 billion shares, or 30% of its total share capital, at a price range between HK$6.26 and HK$8.16. Trading is expected to begin on 10 December.
The company is said to have cemented four core investors for the IPO who will buy a combined stake worth HK$2.6bn: US billionaire Wilbur Ross; China Life Insurance Group; Value Partners; and Bank of East Asia’s chairman David Li Kwok-po. Proceeds from the IPO will be ploughed directly into new wind farms.
Only two renewables firms, Spain’s Iberdrola Renovables and Portugal’s EDP Renovaveis (EDPR), have launched larger IPOs during the past decade. Iberdrola Renovables raised $6.6bn in 2007, while EDPR drummed up $2.4bn in 2008.
In 2007 Longyuan became the first Chinese wind-farm operator to crack the 1GW mark. It now boasts approximately 50 wind farms across China, many registered under the Kyoto Protocol’s Clean Development Mechanism.
Longyuan officials claim they will have 6GW of installed wind capacity by the end of 2010, and 20GW by 2020. At its current growth rate, the company will be one of the world’s top three wind generators by 2010.