China Power International shares plunge on rights issue-financed clean energy assets purchase

Shares of China Power International Development (CPID), one of two Hong Kong-listed units of state-owned State Power Investment Corp, tumbled about 6 per cent after it announced it would buy a basket of clean energy assets from the parent for 5 billion yuan in a deal partly financed by a rights share issue.

CPID has agreed to pay 4.97 billion yuan to buy hydro, natural gas, wind and solar power projects with total capacity of 1,994 megawatts (MW) and projects under construction of 1,875MW.

The projects are located in the provinces of Guangdong, Anhui, Hubei and Shandong, as well as the Guangxi Zhuang autonomous region.

“The acquisitions will further shift the company’s power generation portfolio towards a higher proportion of clean energy assets,” the company said in a filing to Hong Kong’s stock exchange late on Monday.

They will lift CPID’s installed capacity – as calculated by its stake ownership – by 11.8 per cent to 18,837.8MW, and raise clean energy’s contribution to its total capacity to 32.9 per cent from 25 per cent, it said.

When all the projects under construction are completed, the contribution ratio will rise further to 40 per cent, it added.

CPID shares traded 5.7 per cent lower at HK$2.46 at 2:10pm on Tuesday, having dipped 6.1 per cent at one point earlier in the trading session.

In a separate filing, CPID said it plans to raise at least HK$2 billion from a rights issue that would see it offer one share for every three existing shares to part-finance the acquisition.

The selling price will be determined by the board “with reference to the market trading price, having regard to the prevailing market conditions,” it added.

The acquisition is sizeable enough to require approval by independent shareholders, while the rights share issue is not.

CPID’s Hong Kong-listed sister firm China Power Clean Energy Development also has a large portfolio of natural gas, wind, hydro, solar and waste-to-energy power generation projects.

In December 2015, the sister firm inked an agreement with parent State Power Investment – one of the nation’s big-five state-owned power generators, under which the latter’s nuclear technology unit, State Nuclear Power Technology Corp (SNPTC), will inject all of its nuclear power assets into the sister firm.

SNPTC was tasked by the central government a decade ago to act as the importer of so-called third generation nuclear technology from France and the United States, and commercialise it in China and overseas.

The asset injection plan has been under discussion and negotiation, with no clear completion time frame.

It is not known whether China Power New Energy will keep its non-nuclear clean energy assets after the injection.