Solar giant GCL to sell 51pc of unit for US$1.9 billion as Beijing’s curbs on sector prove too hot to handle

GCL Poly Energy, the world’s largest maker of solar panel materials polysilicon and solar wafer, has agreed to sell just over half of its principal subsidiary for up to 12.75 billion yuan (US$1.99 billion) to shore up its finances, as the industry braces for its biggest challenge in years after Beijing made a major cut back on the pace of expansion and subsidy support for solar farms.

The Jiangsu province-based company, which is controlled by businessman Zhu Gongshan and his family, has struck a “framework agreement” to sell 51 per cent of Jiangsu Zhongneng Polysilicon Technology Development to state-backed Shanghai Electric Group, one of China’s big three power generation equipment makers.

“Following the recent indication by [Beijing] to introduce measures aimed at promoting sustainable development of the photovoltaic industry, enhancing development quality and speeding up reduction of subsidies, the directors consider that it is important to find a strategic partner in order to continue the group’s initiative for grid parity,” GCL said in a filing to Hong Kong Exchanges and Clearing late on Wednesday.

“The directors consider the potential formation of a strategic alliance with Shanghai Electric can support the growth and development of Jiangsu Zhongneng and unlock [its] value, which will be beneficial to [GCL’s] shareholders.”

The sale will value the entire subsidiary at up to 25 billion yuan, which means the stake could be sold for 12.75 billion yuan. The final selling price is subject to a valuation report by a valuation company, which will be engaged by Shanghai Electric and approved by GCL.