China Three Gorges Renewables Group Co has won regulatory approval for an initial public offering. A new giant prepares for its largest IPO in China this year.
The unit of China Three Gorges Corp plans to sell up to 8.57 billion shares in Shanghai. According to it, in a prospectus submitted to the Shanghai Stock Exchange, without indicating the value of the funds it intends to raise.
The SOE received written approval from the China securities regulator. That is, according to a statement issued by the China Securities and Regulatory Commission on Friday, April 29, 2021.
Notably, China Three Gorges Renewables announced last year that it is seeking to raise 25 billion yuan ($ 3.85 billion) in an initial public offering. Making it the largest listing in China for 2021 if it starts trading this year like this. And that, according to data compiled by Bloomberg.
And according to the company's website. The parent company is the largest hydroelectric company in the world. And the largest clean energy company in China. The total assets of a renewable energy unit - for solar and wind farms are estimated. Plus small hydropower stations - more than 140 billion yuan.
The largest IPO in China
According to the statement, the share issuance is scheduled to start on May 10, and the company will use the proceeds to finance offshore wind energy projects and fill the liquidity shortage.
The funds are mainly for the targeted projects this year, before the national scheme to support China's offshore wind power runs out, BloombergNEF analyst Liu Wang said. He said the regional subsidies announced so far were not sufficient to make offshore wind projects profitable at current cost levels.
However, the listing comes at a time when China's renewable energy ambitions have risen. Wind energy installations doubled to a record high in 2020. Solar installations are expected to set a new record this year.
Capitalizing on the growing demand for clean energy, the China Renewable Energy Corporation announced in April alone two new solar energy projects. The parent company recently started filling the reservoir in its latest mega-hydropower project. And signed a cooperation agreement with Xinjiang Goldwind Science & Technology Co., Ltd. The second largest wind turbine maker in the world.
In the same vein, Ada Lee, Vice President of Moody's Investors Services, said in a report:
"The proposed initial public offering is in line with government policy directives to reduce the size of state-owned companies and increase joint ownership in such entities." It said the listing would also help reduce the parent company's debt.