China Huaneng Group Corp, the country's largest power producer, plans to take its wind power unit public in a Hong Kong share sale this year worth at least $1 billion, said four people familiar with the plan.
The Beijing-based company hired China International Capital Corp, Goldman Sachs Group Inc, Macquarie Group Ltd and Morgan Stanley to arrange the initial public offering, said three of the people, who declined to be identified because the information hasn't been officially announced.
China is encouraging cleaner energy to combat climate change and meet demand for power in an economy that expanded 10.7 percent in the fourth quarter. The government may lift its 2020 target for wind power capacity by 50 percent to 150 gW, representing a 20 percent annual growth rate from 2009, Goldman Sachs said in a research note dated Feb 3.
The world's fastest growing major economy relies on coal for about 80 percent of its power production. China's wind power generation capacity doubled for the fifth year running, to 25.1 gW by the end of 2009, a third of the global additions in the previous 12 months, according to the Global Wind Energy Council.
China Longyuan Power Group Corp, the nation's biggest wind-power producer, in December raised HK$20.1 billion in the world's second-largest alternative energy initial public offering (IPO) since at least 1999, according to data compiled by Bloomberg.
The unit of China Guodian Corp has gained more than 10 percent over its IPO price. The current share price values China Longyuan at about 34 times its 2010 earnings per share as estimated by analysts, almost triple the valuation of Hong Kong's benchmark Hang Seng Index, according to Bloomberg data.
Huaneng's wind power unit may also sell shares in Shanghai, one of the people said.
The Hong Kong IPO of Huaneng's wind power unit alone may raise $1.5 billion, two of the people said. It's not yet certain what assets will be included in the company that will go public.
Huaneng is helping to build a 100 billion yuan wind farm in Jiuquan in the northwestern Chinese province of Gansu, it said in an Aug 19 statement on its website. The project will have a total installed capacity of 10.65 gW.
The first phase of Huaneng's portion of the project is scheduled for completion in the first half of this year with 500 mW of capacity, it added.