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UPDATE 1- Longyuan raises $2.2 bln in HK IPO- sources
December 4, 2009 / 2:00 AM / in 8 years

UPDATE 1- Longyuan raises $2.2 bln in HK IPO- sources

* Raises $2.2 billion in world’s eighth-largest IPO-sources

* Sells 2.1 bln shrs or 30 pct of enlarged share capital

* Shrs priced at HK$8.16 each vs HK$6.26-8.16 range-source

(Adds details, background)

HONG KONG, Dec 4 (Reuters) - China Longyuan Power Group Corp Ltd, Asia’s largest wind power generator, raised $2.2 billion in the world’s eighth-largest IPO this year, when it priced its Hong Kong initial public offering at the top of an indicated range, sources familiar with the deal said on Friday.

Investors are hungry to invest renewable energy stocks in order to tap the fast growth of the sector, despite currently volatile market conditions.

Longyuan, the fifth-largest wind power generator in the world, is a major subsidiary of China Guodian Corporation, one of China’s five largest power generation groups.

China aims to boost wind-generated power to 100 GW by 2020 with investments possibly worth over $150 billion, which will likely make it the world leader in wind energy.

Longyuan’s offering had attracted the interest of China’s sovereign wealth fund China Investment Corp (CIC), U.S. billionaire investor Wilbur Ross and China Life Insurance Group.

The company sold 2.1 billion shares, or 30 percent of its enlarged share capital, at HK$8.16 each, compared with a range of HK$6.26 to HK$8.16, the source said.

Longyuan’s offering price represents a multiple of about 22 times to 28.9 times forecast 2010 earnings.

By comparison, global wind peer Spain’s Iberdrola Renovables IBR.MC trades at 27.2 times 2010 forecast earnings while EDP Renovaveis (EDPR.LS) trades at 30 times, according to UBS research report.

Longyuan’s trading debut is set for Dec 10, under the symbol “916” (0916.HK).

Longyuan had a 24 percent share of China’s wind power market in terms of total installed capacity as of the end of 2008.

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 to 1.78 billion yuan in 2010.

Longyuan’s IPO was handled by Morgan Stanley (MS.N) and UBS UBSN.VX.

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. (US$1=HK$7.75=6.827 yuan) (Reporting by Kennix Chim; Editing by Valerie Lee) ((kennix.chim@thomsonreuters.com; +852 2843 6313; Reuters Messaging: kennix.chim.reuters.com@reuters.net)) ((If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com)

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