SHANGHAI :
Chinese Power Giant Bags USD3.5 Billion in Sector's Biggest Mixed-Ownership Reform
Zhang Yushuo
DATE:  Dec 16 2019
/ SOURCE:  yicai
Chinese Power Giant Bags USD3.5 Billion in Sector's Biggest Mixed-Ownership Reform Chinese Power Giant Bags USD3.5 Billion in Sector's Biggest Mixed-Ownership Reform

(Yicai Global) Dec. 16 -- A unit under China's State Power Investment has raised CNY24.2 billion (USD3.5 billion) as part of the biggest mixed-ownership reform in the nation's power sector to date.

SPIC Huanghe Hydropower Development sold 35 percent of its equity to eight investors via the Beijing Equity Exchange today, China Securities Journal cited State Power Investment's Deputy General Manager Yang Ya as saying. The subsidiary will use the funds to repay loans and build energy bases in Hainan Tibetan Autonomous Prefecture and Haixi Mongol and Tibetan Autonomous Prefecture.

"The clean energy industry is an asset-heavy business and needs large amounts of capital," Yang said, adding that firms in the sector need to "introduce market-based mechanisms and improve their operation efficiency." The sector has stable cash flow and investors like insurance funds are willing to hold shares long term, he said.

The Chinese government introduced mixed-ownership reforms in the 1990s as a way for state-owned enterprises to bring in private capital to become more efficient and competitive, though it is not necessary for such a reform to involve non-state funding. Jilin University's China Center for Public Sector Economy Research said on Dec. 7 that as of this year, 70 percent of centrally owned enterprises had conducted such a reform and 70 percent of those had increased their profit considerably.

China Life Insurance is the biggest of the new backers in SPIC Huanghe Hydropower Development, picking up a 13 percent stake. Other major buyers include Industrial and Commercial Bank of China (8.7 percent), Agricultural Bank of China (5 percent) and China Reform Holdings (2.5 percent), while State Development and Investment, Zhejiang Energy Group, Yunnan Provincial Energy Investment Group and CITIC Securities acquired smaller stakes.

All of the investors are SOEs.

Editor: James Boynton

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Keywords:   Mixed-Ownership Reform,SOE,State Power Investment