Towngas Smart Energy mulls spin-off and IPO of some assets as it doubles down on renewable energy drive in China
- Towngas Smart Energy wants to diversify its sources of financing as it doubles down on China’s huge renewable energy market
- News came as company reported a 7.3 per cent decline in profit to HK$1.53 billion in 2021 from a year earlier
Towngas Smart Energy Company, a subsidiary of Hong Kong and China Gas (Towngas), is considering a spin-off of an unspecified group of assets and a possible initial public offering, to diversify its sources of financing as it doubles down on China’s huge renewable energy market.
The possible IPO would add to funds raised via future capital markets activity, the company said at a Thursday press briefing. The money will be used to help fund a planned HK$60 billion (US$7.7 billion) investment to build and manage 200 zero-carbon industrial parks in mainland China within the next five years, said John Ho Hon-ming, executive director and secretary of the Hong Kong-listed company.
“I don’t exclude the option of a spin-off in around two to three years when we have a certain scale, as the market in China is huge,” said Ho. “We can seek an IPO in China or elsewhere.”
Renewable energy is on the rise in China after the world’s biggest carbon emitter set a goal for peak carbon emissions by 2030 with the aim of achieving carbon neutrality by 2060. Non-fossil energy consumption is also expected to exceed 80 per cent of China’s total energy mix by 2060.
The unit, which is spearheading Towngas’s expansion into renewable energy, also said on Thursday that its profit fell 7.3 per cent to HK$1.53 billion in 2021 from a year earlier. Revenue jumped 33.5 per cent to HK$17.13 billion in the same period, it said after the market close in Hong Kong.
Its stock price rose 10.5 per cent amid a broad 7 per cent move higher for the Hang Seng Index after Beijing vowed to ensure market stability amid various economic headwinds.
Towngas Smart Energy is chaired by Peter Lee Ka-kit, son of Hong Kong real estate tycoon Lee Shau-kee. Parent Towngas, whose history dates back to 1862, is the sole supplier of piped, cooking gas to households in Hong Kong. The firm is controlled by Henderson Land Development, the property firm founded by 93-year-old Lee Shau-kee.