China Huadian Corp., the nation’s fourth-biggest power producer, will sell shares in its renewable-energy unit in Hong Kong to raise as much as $1.5 billion, said two people with knowledge of the matter.
Bank of America Corp. (BAC), Citic Securities International Co. and UBS AG (UBSN) were hired to manage the initial public offering of Fuxin New Energy Co., said the people, who declined to be identified before an announcement. The Huadian unit is expected to start trading in the second half, one of the people said.
“Since the Japan nuclear crisis any company connected with the nuclear industry has been hammered and renewable companies have traded up in Hong Kong, so there’s good market sentiment for renewable energy,” said Dave Dai, an analyst at Daiwa Securities Capital Markets.
China, planning to build more nuclear reactors than any other country, said on March 16 it has suspended approval of all new atomic projects until a safety review is carried out. Wind- farm operator China Longyuan Power Group Corp. (916) gained 18 percent in Hong Kong since the March 11 earthquake and tsunami in Japan led to the worst nuclear crisis since Chernobyl in 1986. China Datang Corp. Renewable Power Co. advanced 13 percent.
“The checks on safety will delay the nuclear program in China, so the feeling is the government will give more support to renewable energy, at least in the short term,” said Dai, who’s based in Hong Kong.
Fuxin New Energy’s parent had 77 gigawatts of generating capacity at the end of 2009, according to a statement on the company’s website. About 18 percent of Huadian’s electricity was produced by hydropower and about 1 percent from wind.
Hong Kong IPOs
The Huadian unit may raise at least $1 billion, the two people said. Two telephone calls to the Beijing office of Fuxin New Energy went unanswered.
Hong Kong IPOs have raised $2.1 billion so far this year, compared with $4.5 billion in the first quarter of 2010, according to data compiled by Bloomberg. Hilong Holding Ltd., a Chinese provider of oilfield services, postponed its $190 million IPO in the city because of “unforeseen adverse market conditions,” the company said on March 17.
Far East Horizon Ltd., the financial leasing unit of Sinochem Group, pushed ahead with its Hong Kong IPO, which raised $660 million. It will start trading tomorrow.
