China wind power group seeks $HK17bn in HK IPO: sources
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By Kennix Chim of Reuters
HONG KONG - China Longyuan Power Group Corp Ltd, Asia's largest wind power generator, plans to raise up to $HK17.1 billion ($US2.2 billion) from a Hong Kong initial public offering (IPO), sources close to the deal said.
Longyuan is a major subsidiary of China Guodian Corporation, one of China's five largest power generation groups. The company is selling 2.1 billion shares, or 30 per cent of its enlarged share capital, at a price range indicated between $HK6.26 and $HK8.16 per share, the sources said.
The company could not immediately be reached for comment.
Longyuan initially planned to raise around $US700 million through the IPO, sources told Reuters in July, but the company has boosted its expectations because of stronger-than-expected demand.
The sources are directly involved in the deal but are not authorised to speak on the record about the transaction.
The company is selling 2.1 billion shares, or 30 per cent of its enlarged share capital, at a price range indicated between $HK6.26 and $HK8.16 per share, the sources said.
Longyuan's offering price represents a multiple of about 22 times to 28.9 times forecast 2010 earnings and postshoe multiple of 23 times to 30 times, one of the sources said.
By comparison, global wind peer Spain's Iberdrola Renovables trades at 28 times 2010 forecast earnings while EDP Renovaveis trades at 30 times.
The company, which will kick off a marketing roadshow on Monday, aims to list on December 10, in a deal handled by Morgan Stanley and UBS.
Longyuan is the largest wind power generator in Asia and the fifth-largest in the world. It had a 24 per cent share of China's wind power market in terms of total installed capacity as of the end of 2008, according a UBS report, citing wind power research company BTM Consult.
The company had 3,032 MW of consolidated wind power generating capacity at the end of the third quarter 2009.
The underwriters on average estimated Longyuan's 2009 earnings would jump 164 per cent to 890 million yuan ($US130 million), and a further 100 per cent jump to 1.78 billion yuan in 2010.
The growth is mainly because of capacity expansion in the wind power segment and lower coal costs.
Renewable energy accounts for just a fraction of a percent of China's total electricity output. Coal-dependent China hopes to bring that up to 10 per cent by 2010 and 15 per cent by 2020.
Last year, global investments in renewable energy reached $US119 billion, where a fifth was invested in Asia Pacific, according to a report by UNEP Sustainable Energy Finance Initiative.
China led new investment in Asia, rising 18 per cent over 2007 to $US15.6 billion, mostly in new wind projects.
China's renewable energy sector has grown remarkably in recent years, as Beijing pushes for sustainable development, but overcapacity is already threatening polysilicon and wind power equipment industries as a result of blind expansion.
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