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Dongfang in USD 2b+ financial acquisition
Posted on Tuesday, 09 April 2019 12:24
SPIC Dongfang New Energy is expected to become the listing platform of National Power Investment Group Capital Holdings (Capital Holdings) by way of an all-scrip acquisition of the financial services holding company for CNY 14.75 billion (USD 2.20 billion).
The quoted clean energy power generation and cogeneration company is buying some 64.5 per cent from its own controlling shareholder, state-owned enterprise State Power Investment Corporation (SPIC).
It will acquire balance form the likes of Yunnan Energy Finance Holdings (15.0 per cent), Henan Zhonghao Real Estate (2.5 per cent), Southern Power Grid Capital Holdings (15.0 per cent) and Shanghai State-owned Enterprise Reform and Development Equity Investment Fund Partnership (3.0 per cent).
Prior to the acquisition, Dongfang was focused on producing electricity and heat from wind and solar power generation, and other sources, and distributing energy.
The group had operating income of CNY 2.96 billion and net profit attributable to shareholders of CNY 1.39 billion, in the 12 months ended 31st December 2018.
Capital Holdings is a holding company of a group of financial enterprises involved in insurance brokerage and trusts, among other things.
The company owns 24.0 per cent of National Power Investment Finance, the entire capital of National Power Investment Group Insurance Broker, 50.2 per cent of Bairui Trust, 44.2 per cent of China Power Investment First Futures and 6.6 per cent of Yongcheng Property Insurance.
The asset injection is aimed at providing SPIC’s financial operations with a capital market platform acting a sustainable replenishment mechanism to support continuous development, expand business scale and improve competitiveness.
However, benefits of the deal include creating a clean energy financial platform with a diversified revenue stream and source of profit, the ability withstand risks, and potential for subsequent growth.
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