Goldwind seeks about $1.3 billion in Hong Kong share sale

The Shenzhen-listed company is seeking to tap into investor interest for new energy businesses, an appetite that appears to remain strong even in the current volatile markets.

Xinjiang Goldwind Science & Technology, China's largest wind power generator, started investor education yesterday for a Hong Kong share sale that may allow it to raise around $1.3 billion.

The Urumqi-based company, which is already listed in Shenzhen, plans to sell 395.3 million new shares, or 15% of its enlarged share capital, according to sources. The target amount of $1.3 billion is not confirmed yet since the deal is "still in a starting phase", but that's approximately what the company is looking for, a source said.

The key selling-points of the deal will be the new energy business which is attracting decent market response even in a volatile market. NVC Lighting's initial public offering in Hong Kong earlier this month received enough interest to trigger a clawback despite rising risk awareness in the market, helped by its strategy of switching to energy-saving lighting products.

Moreover, Goldwind is based in the Xinjiang Uygur Autonomous Region, which, although politically sensitive, is receiving lots of attention from the Chinese government which intends to ensure economic development in the region.

China's National Energy Administration has said the country will spend Rmb50 billion ($7.3 billion) to expedite coal, power and pipeline projects in Xinjiang. The government will also increase energy investments in the region in the coming three years, China National Radio reported on the weekend, citing a deputy director at the energy administration. The report sent the share prices of mainland-listed Xinjiang-based energy companies sharply higher yesterday. Goldwind's A-shares gained 3.97% to Rmb23.56.

Goldwind raised Rmb1.8 billion ($244 million) in a Shenzhen IPO arranged by Haitong Securities in 2007. It sold 50 million shares at Rmb36 apiece -- a price that at the time translated to a price-to-earnings ratio of 29.98 times.

Despite the high valuation, the offering got a rampant response in the secondary market as well. The stock soared 283% in early trading and closed 263.9% above the IPO price at Rmb131, which represented a P/E ratio of about 400 times. Such an extravagant surge is unlikely to be seen in any developed stockmarket in the world, but is common on the Shenzhen bourse, a trading board for China's small and medium enterprises.

The company plans to start taking orders for its Hong Kong offering on May 31, the deal will be priced on June 11 (US time), and the trading debut is scheduled for June 22. China International Capital Corp, Citi and Credit Suisse are arranging the transaction.

There are currently more than 30 companies from Xinjiang listed on the mainland stock exchanges, while less than 10 of them are listed in Hong Kong. Mostly they are companies in the energy and natural resources sectors.

On Sunday, Goldwind opened a wholly owned subsidiary in Chicago (Goldwind USA), which plans to offer a variety of wind power solutions, including sales, services and manufacturing platforms, to customers and strategic partners throughout the Americas, the company said in a press release.

"The opening of Goldwind USA marks a major step forward [that the company] has taken in its ongoing endeavour of globalisation," said Wu Gang, chairman and CEO of the group. "As China's leading wind turbine producer with strong independent research and development capabilities, Goldwind aims to build itself into a global leading wind power total-solution provider through the internationalisation of capital, talent, market, technology and products," he said in a statement.

NVC Lighting raised $198 million earlier this month after fixing the price at HK$2.10 per share, which was close to the low end of the indicated range between HK$2.03 and HK$2.90. The retail demand was strong enough to trigger a clawback that increased the allotment to retail investors to 30% from 10%. Goldman Sachs and HSBC were joint bookrunners on the deal.

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