China's two largest power producers plan to list their wind units in Hong Kong this month, counting on investor interest even at a time when the Hong Kong market has slumped.
Huaneng Group, China's largest power producer, is planning to take subsidiary Huaneng Renewables public, in a listing that could raise up to $1.3bn, and plans to price this week. China Datang aims to raise as much as $879m for its renewables arm, China Datang Corp Renewable Power, which is doing an investor roadshow. Both have greenshoe options that could increase the size of the offerings by 15 per cent.
Huaneng has raised at least $140m in cornerstone commitments from State Grid, Bank of China, and Temasek, Singapore's sovereign wealth fund.
Chinese wind companies have been eager to tap capital markets, resulting in some half-dozen listings in the past year as firms seek to raise capital and boost their international profile.
Their efforts stand in contrast to struggling renewables listings in Europe, such as the green power unit of Italian power company Enel, which raised less than hoped in an IPO in October.
Institutional investors have remained cautious on the sector in the wake of the poor performance of previous listings.
Analysts warn, however, that there are pitfalls ahead for these young businesses.
A big question for operators and turbine makers is the future of the United Nations' clean development mechanism, a $2.7bn programme that has helped fuel China's clean energy programmes.
The mechanism could expire after 2012, and the future price of carbon, if any, is unclear.