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INTERVIEW - JPMorgan eyes share of China 'green IPO' rush

BEIJING (Reuters) - U.S. bank JPMorgan will expand its ‘new energy’ team in China to win more business from what it sees as a trend to increasingly popular “green IPOs”, its China chief said on Tuesday.

An employee counts Renminbi banknotes at a Bank of China branch in Hefei, Anhui province in this November 2009 file photo. REUTERS/Stringer

Fang Fang, JPMorgan’s China CEO, predicts that more new energy and natural resource companies will go public as they seek to fund their rapid expansion, and there could be more consolidation among wind and solar power suppliers, creating a potentially lucrative advisory fee stream for bankers.

“This year, we see lots of opportunities in new energy, natural resources and construction material sectors,” Fang said in an interview on the sidelines of the Chinese People’s Political Consultative Conference (CPPCC).

“I think such ‘green IPOs’ will be the trend for the next few years and some industry consolidation may take place, too. Technology, property and consumer sectors remain active,” said Fang, who is a delegate to the CPPCC, China’s top political advisory body.

In December, China Longyuan Power Group Corp, the world’s fifth-largest wind power generator, raised $2.2 billion via a Hong Kong listing, the biggest wind power IPO in 2009, and Xinjiang Goldwind Science & Technology Co, a wind power producer, plans to raise $1.5 billion this year via a Hong Kong IPO, Reuters reported in January.

Fang, who joined JPMorgan in 2001 and was appointed to his current post in 2007, said the bank placed “a very significant focus” on China and was looking to grow its business there on several fronts.

“We want to provide multiple lines of services, not just investment banking but also something like corporate banking, asset management, commodities and carbon trading,” he said.

“We’re building up our deal pipeline nicely, and I expect deal volume to increase from last year,” he said.

Fang submitted a proposal to Beijing last week that China should set up a domestic carbon trading exchange.

China has pledged to cut the amount of carbon dioxide produced for each unit of economic growth by 40-45 percent by 2020, compared with 2005 levels.

SECURITIES VENTURE

Fang added the bank was looking also to establish a securities joint venture in China as soon as possible, joining other investment banks such as Goldman Sachs and UBS that have already set up China securities joint ventures in recent years.

Under Chinese rules, foreign institutions must team up with local partners to form investment banking joint ventures to underwrite shares and conduct other securities business in domestic capital markets.

“The securities venture will provide us a very good platform to expand into more and new business,” said Fang. “For example, serving domestic investors and issuers and helping foreign investors and issuers access Chinese domestic capital markets.”

In China, JPMorgan already has joint ventures in fund management and futures business. A securities venture would help it tap China’s growing innovative financial business such as the landmark stock index futures scheme due for launch next month.

JPMorgan is also hiring at its locally incorporated bank in China, which provides commercial and corporate banking, and Fang said the bank would add more branches to the five it currently has in big Chinese cities.

“We see lots of growth opportunities in the traditional investment banking business and that still has a long way to go in China,” he said.

“At the same time, we see big potential in many other areas. For example, our local incorporated bank can help us reach more domestic enterprises and provide them with trade finance, treasury management and other corporate banking services.”

(Editing by Ian Geoghegan)

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