Nu­clear gi­ant launches $3.1b pub­lic of­fer­ing in Hong Kong

China Daily (Canada) - - BUSINESS - By LYU CHANG in Beijing and EMMA DAI in Hong Kong

The largest nu­clear plant op­er­a­tor by in­stalled ca­pac­ity in China, CGN Power Co Ltd, launched its Hong Kong ini­tial pub­lic of­fer­ing on Thurs­day, a sign that the race for new nu­clear power plant con­struc­tion is heat­ing up in the world’s fastest-grow­ing nu­clear mar­ket.

CGN Power, a sub­sidiary of China Gen­eral Nu­clear Power Group, be­gan tak­ing or­ders from in­vestors on Thurs­day. It plans to is­sue up to 8.825 bil­lion shares on the stock ex­change in Hong Kong at a range of HK$2.43 (31 cents) to HK$2.78, it said in an an­nounce­ment.

The deal will be priced on Dec 3 and the shares will list on Dec 10. If all goes as sched­uled, it will be­come the first Chi­nese nu­clear power company to go pub­lic.

“The mar­ket is re­spond­ing en­thu­si­as­ti­cally to the float of CGN Power,” a per­son close to the de­vel­op­ment said. “Though we haven’t put all the num­bers to­gether, from what we have seen, the company is on track for an over­sub­scrip­tion.”

Many long- only funds and hedge funds are in­ter­ested be­cause of the unique na­ture of the company and its plan to in­ject more as­sets after list­ing. “It’s worth hold­ing,” the per­son said, adding that the 33 per­cent of prof­its promised for an­nual div­i­dends are “slightly higher than the mar­ket av­er­age”.

The company will raise about $3.164 bil­lion at the top of its ex­pected range. More than half of the pro­ceeds will go to­ward buy­ing a stake in the Tais­han nu­clear power sta­tion, which is owned by par­ent CGN.

About 27.5 per­cent will be used to op­er­ate cur­rent nu­clear projects and the rest used to build more plants and ex­pand over­seas, ac­cord­ing to the no­tice.

The deal comes as China’s three ma­jor nu­clear com­pa­nies are rac­ing to build more plants at home and try­ing to lever­age their ex­pe­ri­ence to cap­ture deals over­seas.

The coun­try has been pro­mot­ing nu­clear power amid the mount­ing pres­sure of air pol­lu­tion.

China aims to raise its in­stalled nu­clear ca­pac­ity from 14.6 gi­gawatts in 2013 to 50 gW by the end of 2017. Among all types of clean en­ergy, only so­lar power is ex­pected to grow faster.

“Nu­clear power has bright prospects in China. We need more elec­tric­ity to fuel eco­nomic growth. Mean­while, the coun­try is re­struc­tur­ing the en­ergy sec­tor to be greener and more sus­tain­able,” Gao Ligang, ex­ec­u­tive di­rec­tor and pres­i­dent of CGN Power, told re­porters in Hong Kong.

As of Sept 30, CGN Power’s to­tal debt was 81.5 bil­lion yuan ($13.3 bil­lion), of which two-thirds was longterm debt. Ten per­cent was set to ma­ture within one year.

“CGN Power has a de­cent scale and sta­ble business,” said Zhang Liang, an an­a­lyst at Sun Hung Kai Fi­nan­cial. “It’s not a sur­prise to see a lot of debts on its bal­ance sheet. It is an as­set-heavy business and they have many projects un­der con­struc­tion.”

CGN is on track to more than dou­ble its in­stalled nu­clear ca­pac­ity from 8.3 gW at the end of 2013 to 21.7 gW by 2016.

Its ma­jor com­peti­tor, China Na­tional Nu­clear Corp, is await­ing ap­proval for an IPO in Shang­hai as it ac­cel­er­ates over­seas ex­pan­sion.

China has 21 nu­clear re­ac­tors op­er­at­ing at eight sites and 28 un­der con­struc­tion. Con­tact the writ­ers at lvchang@chi­ and em­madai@chi­nadai­lyhk. com

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