China’s CDH, Oriza back carve-out IPO of Canadian Solar’s subsidiary

Photo: Sungrow EMEA/Unsplash

Nasdaq-listed solar power firm Canadian Solar Inc. will raise 1.78 billion yuan ($260 million) for its Module and System Solutions (MSS) subsidiary, CSI Solar Co Ltd, so that it qualifies for a planned carve-out initial public offering (IPO) in China.

Institutional investors, such as Chinese alternative investment fund manager CDH and SIP Oriza PE Fund Management, a private equity arm of China’s Oriza Holdings, agreed to purchase existing CSI Solar shares from the parent firm for a total of 1.50 billion yuan ($219 million) at an equity valuation of 7.50 billion yuan ($1.1 billion), said Canadian Solar in a statement on September 30.

Meanwhile, a number of Canadian Solar employees would also buy existing CSI Solar shares from Canadian Solar for an aggregate of 31 million yuan ($4.5 million) at the same valuation.

Eligible CSI Solar employees and board members will subscribe to the firm’s newly-issued shares via platforms set up in accordance with CSI Solar’s employee stock ownership plan (ESOP) for 248 million yuan ($36 million) in total, at a valuation discount of 30 per cent, or 5.25 billion yuan ($768 million).

Upon the completion of the deal, Canadian Solar, third-party investors, Canadian Solar employees, and ESOP platforms will respectively own 74.9 per cent, 20 per cent, 0.4 per cent, and 4.7 per cent of CSI Solar.

The Guelph, Canada-based solar power company roped in third-party investors about two months after it had announced the decision to pursue an IPO for CSI Solar on the mainland Chinese capital market.

The IPO location will be either the Shanghai Stock Exchange’s STAR Market, or the Shenzhen Stock Exchange’s ChiNext Market, said Canadian Solar in a separate statement in July.

To qualify, CSI Solar is required to be converted into a Sino-foreign joint stock company prior to listing, which shall be completed through a round of equity financing from China-domiciled investors, according to Chinese securities regulations. The IPO process is estimated to take around 18-24 months.

Canadian Solar said that it will actively prepare for the planned IPO of CSI Solar in China after the completion of this equity investment. The parent firm intends to remain as the majority and controlling shareholder of CSI Solar after its IPO.

Canadian Solar’s wholly-owned global project development business, i.e. its energy subsidiary, is not part of this transaction or future planned carve-out IPO of the MSS business.

This fundraising marks “an important milestone” for Canadian Solar and takes the firm “one step closer” towards the planned listing of CSI Solar in China, said Shawn Qu, chairman and CEO of Canadian Solar, in the statement. “It will also give us the capital to immediately expand our manufacturing capacity with the most advanced manufacturing technologies available to support our targeted 18GW to 20GW in shipments for 2021.”

“We believe this strategy will allow us to expand our market share, sustain and enhance our future pricing power and maintain better control over our manufacturing costs,” said Qu.

Founded in 2011, Canadian Solar is a manufacturer of solar photovoltaic modules and provider of solar energy solutions. Over the past 19 years, Canadian Solar has successfully delivered over 46 GW of solar photovoltaic modules to customers across over 150 countries. It went public on Nasdaq in November 2006.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.