Datang International Power Generation Co, the third-largest Chinese
electricity producer listed in Hong
Kong, could raise as much as 3.34 billion yuan (US$427 million) in a Shanghai initial public offering to raise funds for plants.
Datang Power will sell 500 million yuan-denominated shares for between
5.88 yuan (74 US cents) and 6.68 yuan (85 US cents) each, the Beijing-based utility said in a statement to the Shanghai Stock Exchange yesterday.
The utility plans
to expand in areas including South China's Guangdong Province, which has the largest economy in China,
and Inner Mongolia, the fastest-growing region.
Datang is
offering the stock at a discount of at least 5 per cent to the last closing
price of its Hong Kong shares to lure investors from Chinese mainland.
"Demand for electricity will likely remain strong as the economy expands
at about 10 per cent next year, and earnings may keep increasing as the company
adds new capacity to boost utilization," said Judith Chen, a utility analyst at
KGI Asia Ltd in Shanghai.
The new share issue accounts for about 8.8 per
cent of the company's expanded capital, according to the prospectus issued by
Datang Power, which started marketing the shares from yesterday.
Datang
Power's Hong Kong-traded shares gained 0.14 per cent to HK$6.98 (90 US cents)
after advancing 3.9 per cent to HK$6.97 yesterday.
China, the world's
second-biggest electricity user, is experiencing a fourth year of electricity
shortages because generators cannot match demand during summer.
China's
economy expanded 10.7 per cent in the first nine months of this year.
Datang Power expects to start operating 4,500 megawatts of new
generating capacity this year, compared with 6,240 megawatts in 2005, it said.
The utility owned and operated plants with a total installed capacity of
13,810 megawatts at the end of last year.
Guangdong's economy grew more
than 13 per cent last year to 2.2 trillion yuan (US$278 billion), according to
the statistics bureau. Inner Mongolia Autonomous Region's economy expanded 23.8
per cent.
Datang Power also plans to add capacity in Shanxi, Gansu, Yunnan and Sichuan.
BOC International Holdings Ltd, the
investment-banking unit of Bank of China Ltd, is managing the share offer.
(For more biz stories, please visit Industry Updates)