Huaneng to buy shares in Shenzhen Energy
Eric Ng in Beijing
Huaneng Power International, the listed arm of state-owned power producer China Huaneng Group, will buy up to 1.52 billion yuan worth of new shares in Shenzhen Energy Investment, the largest power firm in the southern city.
The move will allow Hong Kong-listed Huaneng to maintain its interest in the assets of Shenzhen Energy's parent firm, in which Huaneng owns 25 per cent.
Shenzhen Energy Group is injecting all of its nine billion yuan worth of power assets into Shenzhen Energy Investment and will be dissolved after the transaction.
Huaneng said it will subscribe for up to 200 million new shares in Shenzhen Energy Investment at 7.60 yuan each.
The price represents a 10.9 per cent discount to the stock's closing price of 8.53 yuan on Monday. Shenzhen Energy Investment's shares yesterday closed 2.7 per cent lower at 8.30 yuan.
Shenzhen Energy Investment is selling 1.25 billion new shares to its parent firm and other institutional investors, including Huaneng, to fund the assets purchase.
'The subscription of the shares ... [will ensure] the company's interests in Shenzhen Energy Investment [are] maintained at not lower than 25 per cent,' Huaneng said.
Shenzhen Energy Investment reported net profit of 243 million yuan for the third quarter, up 68 per cent from 144 million yuan a year ago. Sales rose 6.7 per cent to 1.94 billion yuan from 1.82 billion yuan.
Huaneng and its parent firm are keen to increase exposure to the lucrative power market in Guangdong province, which accounted for only about 5.5 per cent of the company's generation capacity at the end of last year.
The parent company signed a deal in August to buy 24 per cent of the province's largest power producer, Guangdong Yuedian Group, which has 40 per cent of the market, becoming the firm's second-largest shareholder.
In September, Huaneng won approval from the central government to build a 9.21 billion yuan, 2,000-megawatt power project in Shantou, Guangdong.