* Selling 30 pct of its enlarged share capital-sources
* Price range indicated at HK$6.26-HK$8.16 a share-sources
* Demand for IPO stronger than expected-sources
(Adds details and background)
By Kennix Chim
HONG KONG, Nov 22 China Longyuan Power Group
Corp Ltd, Asia's largest wind power generator, plans to raise up
to HK$17.1 billion (US$2.2 billion) from a Hong Kong initial
public offering (IPO), sources close to the deal said on Sunday.
Longyuan is a major subsidiary of China Guodian Corporation,
one of China's five largest power generation groups. The company
is selling 2.1 billion shares, or 30 percent of its enlarged
share capital, at a price range indicated between HK$6.26 and
HK$8.16 per share, the sources said.
The company could not immediately be reached for comment.
Longyuan initially planned to raise around $700 million
through the IPO, sources told Reuters in July, but the company
has boosted its expectations because of stronger-than-expected
The sources are directly involved in the deal but are not
authorised to speak on the record about the transaction.
The company is selling 2.1 billion shares, or 30 percent of
its enlarged share capital, at a price range indicated between
HK$6.26 and HK$8.16 per share, the sources said.
Longyuan's offering price represents a multiple of about 22
times to 28.9 times forecast 2010 earnings and postshoe multiple
of 23 times to 30 times, one of the sources said.
By comparison, global wind peer Spain's Iberdrola
Renovables IBR.MC trades at 28 times 2010 forecast earnings
while EDP Renovaveis (EDPR.LS) trades at 30 times.
The company, which will kick off a marketing roadshow on
Monday, aims to list on Dec 10, in a deal handled by Morgan
Stanley (MS.N) and UBS UBSN.VX.
Longyuan is the largest wind power generator in Asia and
the fifth-largest in the world. It had a 24 percent share of
China's wind power market in terms of total installed capacity
as of the end of 2008, according a UBS report, citing wind power
research company BTM Consult.
The company had 3,032 MW of consolidated wind power
generating capacity at the end of the third quarter 2009.
The underwriters on average estimated Longyuan's 2009
earnings would jump 164 percent to 890 million yuan ($130
million), and a further 100 percent jump to 1.78 billion yuan in
The growth is mainly because of capacity expansion in the
wind power segment and lower coal costs.
Renewable energy accounts for just a fraction of a percent
of China's total electricity output. Coal-dependent China hopes
to bring that up to 10 percent by 2010 and 15 percent by 2020.
Last year, global investments in renewable energy reached
$119 billion, where a fifth was invested in Asia Pacific,
according to a report by UNEP Sustainable Energy Finance
China led new investment in Asia, rising 18 percent over
2007 to $15.6 billion, mostly in new wind projects.
China's renewable energy sector has grown remarkably in
recent years, as Beijing pushes for sustainable development, but
overcapacity is already threatening polysilicon and wind power
equipment industries as a result of blind expansion.
(Editing by Michael Flaherty and Jon Loades-Carter)
((firstname.lastname@example.org; +852 2843 6313; Reuters
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