Huaneng Renewables Corp., the wind- power unit of China's biggest electricity producer, plans to revive a Hong Kong initial share sale after cutting the size of the offering by about 20 percent to $1 billion, two people with knowledge of the matter said.
The unit of China Huaneng Group Corp. aims to start trading in early June, said the people, who declined to be identified because the information is private. Huaneng Renewables scrapped its earlier plan because of unexpected and excessive market volatility, the company said on Dec. 13.
The 7.8 percent drop in the benchmark Hang Seng Index (HSI) since its 2010 peak in November has delayed initial share sales of companies including Australia's Resourcehouse Ltd. and China's Hilong Holding Ltd. Huaneng Renewables, seeking funds to expand capacity and meet rising Chinese demand for clean energy, had previously sought to raise as much as $1.3 billion.
"The group is attractive as there's all the upside of energy consumption and power consumption growth in China over the next few years," Michael Parker, a senior research analyst at Sanford C. Bernstein & Co., said by phone from Hong Kong. "Renewable companies are facing decreasing wind-turbine prices, which will continue to fall and improve the economics of new wind farms in China."
Turbine prices dropped about 5 percent in the first quarter from the previous three months to an average of 3,797 yuan ($584) per kilowatt, according to Bloomberg New Energy Finance.
The government wants at least 15 percent of the country's energy to come from renewable sources, including wind, by 2020. China increased its wind-power capacity in 2010 by 67 percent to 42.5 gigawatts, data from Bloomberg New Energy Finance show.
Datang Renewable
Morgan Stanley, China International Capital Corp. and Macquarie Group Ltd. are managing the Huaneng Renewables sale, the two people said. Hu Xiaoyu, a director at China Huaneng Group's news office in Beijing, didn't return three telephone calls seeking comment.
China Datang Corp. Renewable Power Co., the wind unit of the nation's second-largest power producer, raised HK$5 billion ($643 million) in a Hong Kong initial public offering in December. The shares have since gained 4.6 percent. The stock closed at HK$2.29 today.
The Hang Seng completed its longest stretch of losses since April 2003 in the eight days to May 6 as economic reports in the U.S. and falling commodity prices damped investor confidence in the global recovery. The index fell 0.9 percent today to its lowest close since March 29.
Hong Kong IPOs
Hong Kong IPOs have raised $5.1 billion so far this year, down from $5.4 billion a year earlier, according to data compiled by Bloomberg. The number of initial share sales rose to 20 this year from 18 in the year-earlier period, the data show.
Samsonite LLC, the U.S. luggage maker backed by London- based CVC Capital Partners Ltd., plans to start trading in the city in mid-June after a $1 billion IPO, two people with knowledge of the matter said. The 101-year-old company is scheduled to attend a hearing today at the Hong Kong stock exchange to present its share-sale plan, the people said.
Beijing Jingneng Clean Energy Co., an operator of gas-fired power plants in China's capital, is seeking as much as $700 million in a Hong Kong IPO, two people with knowledge of the matter said. The unit of state-owned Beijing Energy Investment Holding Co. aims to start trading in June, the people said.
