VPower launches HK$1.94 bn IPO to fund expansion into emerging markets

VPower Group, which generates electricity from natural gas and diesel-based engines in regions of China and Southeast Asia short of energy supply, aims to raise HK$1.94 billion via an initial public offering to fund further expansion, particularly emerging markets in Africa and the Middle East.

The Hong Kong-based firm was founded in 1997 by chairman Samson Lam Yee-chun who began selling back-up generators to factories in the mainland, after having worked as a project engineer in the Hong Kong unit of US power generation engine major Cummins Engine, now its biggest rival in Asia.

In 2001, he co-founded VPower with co-chief executive Jason Lee Chong-man, and set up a facility in Shenzhen in 2003 to maintain and provide after-sales services and assemble generator sets.

Revenue grew from HK$575.8 million in 2013 to HK$1.21 billion last year.

Of last year’s sales, 80 per cent came from buying and installing generators for customers – mostly in China and other Asian nations – and the rest from charging customers for power produced by generators it invested and installed in Bangladesh, Indonesia and Myanmar.

Chief financial officer Keith Chan Kam-shing said VPower has bought “all-risk” and political insurance that would provide “relatively sufficient” protection to its emerging market assets, although its listing prospectus said it is not protected against war, terrorism, expropriation, nullification of contracts and currency exchange restriction risks.

Net profit grew to HK$141.2 million last year from HK$9.3 million in 2013.