China Three Gorges Renewables Group shares jumped 44% in its debut after the company raised $ 3.6 billion in the largest initial public offering of 2021 in China.
Shares in the renewable energy arm of China Three Gorges Corp, the state-owned company that lends its name to the hydroelectric dam on the Yangtze River, raised the maximum daily amount allowed by the Shanghai Stock Exchange on Thursday.
The group raised 22.7 billion Rmb ($ 3.6 billion) during its IPO, the largest IPO in the country since a sale of shares of $ 7.6 billion by the most major Chinese chipmaker, Semiconductor Manufacturing International Corporation, last July. The first-day jump pushed the company’s market cap to $ 17.1 billion, according to Bloomberg.
The first day of success for China Three Gorges Renewables, which also has a stake in wind power, came as China faces a steep rise in the cost of coal-fired electricity.
The move reflects the strong appetite of Chinese investors for green power assets as Beijing seeks to make wind a much larger contributor to the country’s power generation, said Bruce Pang, head of research for China Renaissance investment bank.
“It’s not just a trend in China – it’s a trend across the world,” Pang said.
Demand for shares in the IPO exceeded supply 78 times, according to the company.
The group will use part of the proceeds from the sale of shares to cover nearly half the cost of seven offshore wind projects, as it and other renewable energy companies rush to complete the infrastructure before the government grants expire at the end of the year.
“We expect China Three Gorges will strive to complete the projects this year in order to receive the grants,” said Apple Li, credit analyst at S&P Global Ratings.
The rating agency said this week that the IPO would provide a significant injection to the balance sheet of parent group China Three Gorges as the subsidiary pursues an “ambitious plan to develop non-hydroelectric renewables” over the next few years.
China Three Gorges Renewables on Tuesday launched its first floating offshore wind platform off the coast of southeast China’s Zhejiang province. The company said the platform could deliver “green and clean energy to 30,000 homes per year.”
Unlike stationary wind turbines, which can only operate in shallow water, floating wind turbines can generate electricity further offshore, harnessing the power of stronger ocean winds.
In September, China pledged to achieve carbon neutrality by 2060, but its industry-fueled recovery from the Covid-19 pandemic has put pressure on its environmental ambitions. In 2020, it produced record amounts of steel and increased approvals for new coal-fired power plants.
Research conducted last year by Wang Muyi, analyst at UK think tank Ember, found that new investments in wind, hydro, solar and nuclear power could not cope with a surge in energy consumption. electricity in China between May and October.
The country is also suffering from a coal shortage as industrial activity explodes, pushing up prices. Last month, a State Council meeting chaired by Premier Li Keqiang stressed the need to further exploit China’s “rich coal resources”, but added that the capacity of wind, solar , nuclear and hydroelectric would be increased to ensure energy supply this summer.
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