China Huaneng's Wind Offer May Lead to New Green Power Listing

(Bloomberg) -- China Huaneng Group Co.’s plan to buy the remaining shares in its Hong Kong-listed wind power generator could be part of an effort to create a new green energy unit.

The listed company, Huaneng Renewables Corp., said in a filing to the Hong Kong stock exchange Monday that the state-owned parent intends to make an offer for all outstanding shares, which could lead to privatization and delisting.

If completed, Huaneng Group could consolidate the wind power capacity with other assets, including solar farms it aims to acquire through a separate deal, according to analysts at BOCOM International Holdings and ICBC International Research Ltd. Those solar assets could come via its June offer to buy control of GCL New Energy Holdings Ltd., also traded in Hong Kong.

“Huaneng Group could consolidate its renewable assets into a new platform, especially if it completes the GCL acquisition," said Louis Sun, an analyst at BOCOM in Shanghai.

China, the world’s largest installer of renewable power capacity, has also been seeking to cut the amount of idled capacity, known as curtailment, and boost the industry’s cost competitiveness. Huaneng Renewables is expected to rush to boost capacity over the next two years to get ahead of Beijing’s plan to halt financial support for new onshore wind farms from 2021.

‘Higher Valuation’

The potential new unit could also include 7.5 gigawatts of Huaneng Group wind power capacity not already part of the listed company, Nelson Lee and Harry Wong at ICBC wrote in a note Monday. “The consolidated assets could then be listed in other platforms with much higher valuation,” they wrote.

Huaneng Group controls 52.7% of the renewable company’s total issued shares, according to Monday’s statement. Nobody answered calls to the parent company’s headquarters and it didn’t respond to a fax seeking comment.

Huaneng Renewables shares in Hong Kong, which resumed trading after being suspended Friday, surged as much as 26%. They ended the day up almost 22%, the most on record.

The company last week reported a first-half net income of 3.09 billion yuan, beating a 2.83 billion yuan median of three analyst estimates compiled by Bloomberg. Sales growth should continue into the second half of the year as it plans to expand wind power capacity by more than 1.2 gigawatts, according Bloomberg Intelligence.

--With assistance from Jasmine Ng and Dominic Lau.

To contact Bloomberg News staff for this story: Feifei Shen in Beijing at fshen11@bloomberg.net

To contact the editors responsible for this story: Ramsey Al-Rikabi at ralrikabi@bloomberg.net, Aaron Clark

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With assistance from Bloomberg