China’s state-backed SDIC Power hires banks for $1b London IPO

Photo: Fré Sonneveld/unsplash

China’s state-backed energy firm SDIC Power Holdings has hired a pool of three banks to list in London via the newly-minted Stock Connect scheme, three sources told Reuters, a boost for Britain’s status as a financial centre ahead of Brexit.

Goldman Sachs, HSBC and UBS are leading the transaction as global coordinators, two of the sources said, which could be launched in the second half of this year depending on market conditions.

SDIC Power, with a market value of 57 billion renminbi ($8.3 billion) in Shanghai, is looking to raise between $500 million and $1 billion from the sale of Global Depositary Receipts (GDRs) on the London Stock Exchange, one of the sources said.

SDIC did not immediately respond to an emailed request for comment outside of regular business hours in China.

Goldman Sachs and UBS declined to comment while HSBC was not available to comment.

China’s State Development & Investment Corp has a 49.1% stake in the company, while another 36.8% is listed on the Shanghai Stock Exchange, according to Refinitiv data.

SDIC‘s second biggest shareholder, China Yangtze Power Co -which has a 7.79% stake – is also state-owned.

The company, which focuses on investing, constructing and operating electric power plants, has a presence in Britain through its ownership of Red Rock Power, a Scotland-based wind farm operator.

It is also involved in other alternative energy generation such as hydropower, thermal, wind and photovoltaic.

On July 3, SDIC said its board approved a resolution to sell its GDRs in London.

Last month, Chinese brokerage Huatai Securities became the first company to list in London under the much-anticipated Stock Connect link with the Shanghai exchange.

There have been concerns that not many companies would follow Huatai to London, but one of the sources said at least three or four Chinese companies have sent out “requests for proposals” to law firms and banks who may be interested in advisory roles on listings.

The source also said SDIC‘s plans are the most advanced as the company has obtained board approval for the listing and appointed banks to handle the process.

Under the London-Shanghai Stock Connect scheme, Chinese companies can list depositary receipts pegged to their Shanghai-listed shares, while British companies can issue shares on the Shanghai Stock Exchange.

Talks on the Stock Connect scheme began in 2015, but it went live only this year, coinciding with Britain’s efforts to strengthen ties with non-European countries in financial services to make up for potential loss of business from Brexit.

Reuters

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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).

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  • 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.