Chinese state-owned energy company China Three Gorges Renewables Group is set to launch what is expected to be one of China's largest initial public offerings (IPOs) this year. The company is reportedly aiming to raise up to 25 billion yuan or roughly $3.5 billion through its shares sale in Shanghai.
According to a prospectus published on the China Securities Regulatory Commission (CSRC) website, Three Gorges plans to sell a total of 8.57 billion shares during its IPO. The assets that will be sold are mostly those in the company's domestic wind and solar businesses along with its smaller hydropower plants.
The amount it would potentially raise will make the IPO the mainland's second-largest listing, right behind Beijing-Shanghai High-Speed Railway, which managed to raise around $4.3 billion in January.
Parent company, China Three Gorges, is reportedly planning to establish a new entity that will be focused on managing its international assets. Most of the company's international assets had been acquired over the past decade, a good chunk of which are located in Latin America. Through the listing, the company should have the adequate resources to put up the new company.
Reports citing sources close to the matter revealed that China Three Gorges had initiated talks with its financial advisers regarding the establishment of the new entity. It was reportedly advised to consider a listing or the sale of some of its assets to bolster its finances for the endeavor.
Apart from the establishment of the new entity, China Three Gorges revealed that it will be using up to 20 billion yuan of the IPO proceeds to fund seven new offshore wind farms. The projects are expected to boost the company's power capacity, which will in turn improve its competitiveness and profitability.
The new projects are an addition to the company's previously announced renewable power plant projects, which it had stated would cost around 58 billion yuan in total. The projects, which it had announced back in February, are part of China's wider efforts to stabilize the economy following the coronavirus pandemic.
China Three Gorges action comes as the country rapidly transitions to greener energy sources, a transition that is mainly market-driven. Clean energy development in China has also received massive state backing and the company likely wants to take advantage of the increasing subsidies that were put in place by the government to accelerate the transition.
Apart from the subsidies, the Chinese government has been accelerating its efforts to support companies utilizing renewable energy sources. Officials have begun promoting and supporting new energy firms to allow them to become more competitive against fossil fuel energy providers.
