China Resources New Energy, the renewables platform of China Resources Power, has lodged a prospectus outlining plans to raise about 24.5 billion yuan through an initial public offering on the Shenzhen exchange, according to a filing released today. The unit operates wind farms and photovoltaic power plants across China and serves as the group’s main vehicle for renewable energy development.
The filing indicates the company will place roughly 2.1 billion shares, equivalent to about 16.2% of the enlarged share capital, excluding any overallotment option. Strategic investors are slated to take half of the offer, while institutional and retail buyers will divide the remaining float under an initial 70%-30% split, the document said.
Price consultations for the offering are scheduled to begin on June 16, with subscriptions opening on June 22, the prospectus shows. China International Capital Corp and Citic Securities are named as joint sponsors for the transaction.
Proceeds from the offering will be directed toward the company’s capital plan: the prospectus specifies that roughly 24.5 billion yuan of a broader 40.4 billion yuan investment programme for wind and solar projects will be funded with IPO cash. The filing does not detail how the remainder of the planned 40.4 billion yuan will be financed.
Operational performance disclosed in the prospectus points to near-term pressures. First-quarter net profit fell 31.1% to 1.62 billion yuan, while revenue slipped 2.8% to 6.21 billion yuan. Management attributed the declines to adverse weather, tighter grid curtailment for generation and reduced subsidies for certain plants.
Market reaction to the filing was reflected in a 1.68% decline in the shares of China Resources Power in Hong Kong on Thursday. The prospectus did not indicate an overallotment option size or provide further guidance beyond the timetable for consultations and subscriptions.
What this means
- China Resources New Energy is seeking capital to underwrite the majority of its near-term wind and solar expansion via a Shenzhen IPO.
- The allocation structure reserves half the offer for strategic investors, with the balance split between institutional and retail shareholders.
- Near-term earnings have been impacted by weather, grid restrictions and subsidy changes, according to the company’s prospectus.