(Reuters) – China’s second-largest wind turbine maker, Xinjiang Goldwind Science & Technology Co Ltd, plans to raise up to $1.2 billion in a Hong Kong initial public offering, sources close to the deal said.
The offering will test the appetite for renewable energy firms in a market heavy with property and financial companies. The Hong Kong stock exchange said earlier this year it would mine mainland Chinese and international markets to keep its listing momentum.
Goldwind’s attempt at a Hong Kong IPO could mark the largest offering by a Chinese wind company since the $2.2 billion listing in December of the nation’s biggest wind-power producer, China Longyuan Power Group Corp <0916.
“Goldwind’s IPO is set to test the market’s appetite for renewable plays,” said Jackson Wong, investment manager at Tanrich Securities.
“Its success could signal more IPOs of its kind in the next few months, though unstable markets are still a concern.”
Hong Kong’s Hang Seng Index .HSI has lost more than 6 percent since the start of May in volatile trading, with investors cautious because of the European debt crisis.
Earlier this month, Russia’s Strikeforce Mining & Resources, China Tian Yuan Mining Ltd and Swire Pacific’s (0019.HK) property arm shelved their IPO plans in Hong Kong as global debt worries dented investor appetite for corporate fundraising.
Goldwind (002202.SZ), which is already listed on the mainland’s Shenzhen stock exchange, would offer 395.29 million shares, or 15 percent of its enlarged share capital, with an indicative price range of between HK$19.80 and HK$23, the sources said on Monday.
The H-share offering price range valued Goldwind at 18.8 to 21.8 times prospective 2010 earnings forecast by sponsors, said one of the source close to the deal.
By comparison, Chinese turbine maker Dongfang Electric (1072.HK) trades at 19 times forecast 2010 earnings, while China High Speed Transmission (0658.HK), a maker of wind gear for wind turbines, trades at 15.6 times.
Sources said Goldwind’s IPO will have a greenshoe option to increase the issue size by up to 59 million shares.
The sources have direct knowledge of the offering but were not authorized to speak on the record about the deal.
Goldwind’s shares fell 2.2 percent in Shenzhen on Monday at 22.32 yuan. Its shares have gained 27 percent this year, outperforming the Shanghai Composite Index’s .SSEC 19 percent drop.
Chinese International Capital Corp (CICC), Citigroup (C.N), Credit Suisse (CSGN.VX) and are underwriting Goldwind’s deal.
CICC forecast Goldwind’s net profit this year to jump to 2.4 billion yuan ($351.4 million), a 36.7 percent increase from 2009, and predicted a further 26 percent jump to 3 billion yuan in 2011.
Goldwind, which kicked off its IPO road show on Monday, plans to price the deal on June 11 in the United States, with trading scheduled to begin on June 22.
Goldwind is benefitting from the surging wind energy demand in China. The Chinese government has said it aims to boost total wind-generated power to 100 gigawatts (GW) by 2020 with investments possibly worth more than $150 billion.
The country became the world’s largest wind turbine market in 2009 in terms of new installations totaling 12 GW, up 92 percent year-on-year.
Renewable energy accounts for a fraction of a percent of China’s total electricity output. Coal-dependent China has said it hopes to lift the level to 10 percent by 2010 and 15 percent by 2020.