China Power International Development acquires renewable energy assets

Hong Kong-listed China Power International Development announces HK$2 billion rights issue to buy clean energy project companies

HONG Kong-listed China Power International Development (CPID) is planning a HK$2 billion rights issue to help fund the acquisition of clean energy projects from its own parent companies. The fundraising exercise is being led by Bank of America Merrill Lynch.

CPID is an indirectly controlled subsidiary of State Power Investment Corporation (SPIC), via CPI Holding, and the two mainland entities will sell seven Chinese clean energy companies to the Hong Kong unit.

According to the prospectus, the acquisitions will accelerate CPID's transition into a clean energy company. The companies being acquired are principally engaged in clean energy power generation, mainly hydropower, natural gas power, wind power and photovoltaic power.

The company sees a strategic opportunity for the company to strengthen its presence in high-growth regional markets, namely the five provinces of Guangdong, Guangxi, Anhui, Hubei and Shandong. It is also strategically in line with the implementation of the thirteenth national Five Year Plan in China, as well as commitments made under the Paris Agreement on climate change.

SPIC is an indirect controlling shareholder of China Power Development International, via CPI Holding which owns 55.6% of CPID.

The companies being sold by SPIC and CPI Holding are Guangdong Company, Guangxi Company, Anhui Company, Hubei Company, Shandong Company, Shouxian Company and Sihui Company. The total price being paid by CPID is 4.97 billion yuan (US$750 million).

However, one of the companies with coal interests is being excluded from the deal. There is a simultaneous transaction involving Qian Zhan, which is a wholly-owned subsidiary of Guangdong Company. Qian Zhan owns a cargo port project and a coal-fired power generation project under construction, and is currently incurring operating losses. CPID considers that it does not fit its current acquisition criteria. Therefore, CPI Holding will acquire the entire equity interest in Qian Zhan from Guangdong Company.