Chinese offshore investment

China conglomerate goes offshore with US$803m UK wind farm deal

China Resources National says stake will raise international profile and help to acquire knowledge of offshore operations

PUBLISHED : Tuesday, 19 December, 2017, 4:35pm
UPDATED : Tuesday, 19 December, 2017, 9:15pm

China Resources National, one of the country’s largest state-backed conglomerates, has agreed to buy a 30 per cent stake in an offshore wind farm in the UK for £600 million (US$803 million).

The acquisition follows Beijing’s call for companies to “go global”. The firm’s listed power generation unit, China Resources Power (CRP), will take a 40 per cent stake in a purchasing consortium, in its maiden overseas foray.

The remaining 60 per cent will be held by two other subsidiaries, CRP said in a filing to Hong Kong’s bourse on Tuesday.

“The transaction allows the group to participate in the “go global” strategy of the China Resources Group, and take advantage of the attractive geographical opportunity to raise its international profile,” it said. The move will allow CRP to establish “a platform for cross-border expansion into European markets and make a debut investment in the European offshore wind energy sector”, the company added.

The purchase will be settled by buyers’ funds and bank borrowings.

A CRP spokesman said the company, with no current offshore wind farms in China, is keen to gain experience and knowledge of offshore wind farm operations to help its future expansion in China.

“It is a relatively small investment by CRP, but the board is very supportive on the deal since it is offshore UK, where many well-run wind farms are located, and the industry is supported by a good regulatory environment,” he said.

CRP operated 5,330 megawatts of onshore wind farms in China at the end of June, 14.4 per cent of its total capacity of 37,020MW, predominantly coal-fired.

The Dudgeon wind farm, with an annual capacity of 402 megawatts is located off the coast of Norfolk in eastern England.

It is 35 per cent owned by each of Statoil Wind, a unit of the Norwegian state-backed oil and gas giant Statoil, and the Abu Dhabi-based state-backed renewable energy company, Masdar Offshore Wind UK. The seller of the remaining 30 per cent stake to the Chinese consortium is the state-owned Statkraft, Norway’s largest power producer and one of Europe’s largest renewable energy generators.

China Resources National has operations in the power, consumer products, real estate, cement, gas, pharmaceuticals and finance sectors.

It is one of the 98 state-owned enterprises directly under the administration of the central government, and has an indirectly held 62.9 per cent stake in CRP.

CRP shares traded up 1 per cent at HK$14.18 in afternoon trade. The Hang Seng Index was up by 0.8 per cent.