Trony Solar aims to raise $200 million in Hong Kong IPO

If successful, it will be the second photovoltaic player to list in Hong Kong after Solargiga in 2008, but the competition for investor attention is heating up.

Trony Solar, a Chinese solar power company which aborted an earlier attempt to list on the New York Stock Exchange, has opted for an initial public offering in Hong Kong and aims to raise $200 million to fund its business expansion.

If successful, it will be only the second photovoltaic player to list in Hong Kong after Solargiga in 2008. While the change of listing venues suggests the issuer is confident about Hong Kong as a fundraising platform, most Chinese renewable energy companies are listed in the US. And whether Trony can attract a decent market response in Hong Kong -- a market mainly dominated by banking, property and conglomerates -- remains to be seen, especially with a string of other Chinese companies in different industries also hoping to tap the market through Hong Kong IPOs in the next few weeks.

Trony, which makes thin-film photovoltaic modules for solar power generation, started pre-marketing yesterday with the roadshow scheduled to follow on September 20. The price is expected to be fixed on September 30.

The company and its three existing shareholders are selling 25.7% of the company, according to sources. The offering consists of 90% primary shares and 10% secondary. The deal also comes with a 15% greenshoe option, and, as a routine practice, 10% of the shares are earmarked for retail investors with the rest offered to institutional investors. CLSA and J.P. Morgan are joint bookrunners.

The Shenzhen-based clean energy player initially planned a share sale that would allow it to raise as much as $214.5 million on the New York Stock Exchange in December last year. It offered 19.5 million ADSs (American depositary shares), which were equivalent to 29.25 million common shares, at a price of $9 to $11 apiece.

However, Trony postponed the US IPO indefinitely due to weak market conditions at the time. It waited for a few months, but eventually decided to scrap the plan last month in light of the continued poor conditions, it said in a filing with the Securities and Exchange Commission in the US. Credit Suisse and J.P. Morgan were set to arrange the US deal.

Solargiga also made two attempts to float its shares in 2008 and succeeded the second time around. It first came to market in January that year, but postponed the sale amid volatile markets. Two months later, the company returned with a scaled-down offering. It raised HK$987.3 million ($127 million) by selling 20% of the company, down from 25% initially planned, at HK$2.92 per share. BNP Paribas was the sole bookrunner.

Chinese solar product manufacturers typically have lower production costs helped by cheap raw materials, but tough competition in the sector and sluggish sales for renewable energy systems outside China have depressed profit margins, analysts say.

Also, although researchers have been developing solar-power thin film for more than two decades, the technology has only been integrated into photovoltaic module production very recently. China will continue to rely on coal as the major source of fuel for the next decade or two, observers say.

Separately, Xinjiang Goldwind, which withdrew its Hong Kong IPO in May, is considering tapping the market again. Sources say it is targeting to raise $800 million to $1 billion, but the company is concerned about the recent volatile market conditions and has yet to set a timetable for the deal.

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