|19 November, 2019

Chinese power generation company SDIC says it may list GDRs in London

The proceeds would be used to help expand SDIC's renewable energy business overseas

Image used for illustrative purpose. Smoke rises from the cooling towers of Matla Power Station, a coal-fired power plant operated by Eskom in Mpumalanga province, South Africa, May 20, 2018.

Image used for illustrative purpose. Smoke rises from the cooling towers of Matla Power Station, a coal-fired power plant operated by Eskom in Mpumalanga province, South Africa, May 20, 2018.

REUTERS/Siphiwe Sibeko

Chinese power generation group SDIC 600886.SS is pressing ahead with plans to launch an offering of global depositary receipts (GDRs) in London under a link with the Shanghai exchange, defying a dismal season for stock listings in Europe.

The offering would include newly issued GDRs representing underlying "A" shares in the firm, the company said in a statement.

If successful, SDIC will make its London debut in December, becoming the second Chinese firm to float in Britain under the Stock Connect link with the Shanghai exchange.

It would also be a bright spot for the London Stock Exchange, which has seen a number of initial public offerings (IPOs) cancelled or postponed amid market uncertainty.

Indian special effects firm DNEG and Kazakh finance firm Kaspi.kz were the latest companies to pull their London listing plans. 

Reuters reported in July that SDIC had hired banks to list in London via the Shanghai-London Stock Connect scheme, in a boost for Britain's status as a financial centre ahead of Brexit. 

SDIC Power, which has a market value of $7.9 billion, is looking to raise between $600 and $800 million from the sale, a source familiar with the deal told Reuters.

The proceeds will be used to help expand SDIC's renewable energy business overseas and pay down offshore debt.

Goldman Sachs International, UBS AG London Branch and HSBC Bank plc are acting as joint global co-ordinators and joint bookrunners for the offering which was previously expected to raise as much as $1 billion.

SHANGHAI STOCK LINK

The company, which invests in, constructs and operates electric power plants, has a presence in Britain through its ownership of Red Rock Power, a Scotland-based wind farm operator.

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

"Through this offering, we will gain better access to the international capital markets," Chairman Zhu Jiwei said.

Chinese brokerage Huatai Securities 601688.SS finalised its London listing in June, raising more than $1.5 billion, but there had been concerns that not many companies would follow its lead. 

Britain wants to offer Chinese companies an attractive trading environment as it sees cooperation with Beijing as critical after Brexit. Earlier this year it launched a much-anticipated link with the Shanghai exchange.

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

($1 = 7.0229 Chinese yuan renminbi)

(Reporting by Noor Zainab Hussain and Pamela Barbaglia; Editing by Rachel Armstrong and Jan Harvey) ((noor.hussain@thomsonreuters.com; Within UK +44 20 7542 1810; Outside UK +91 80 6182 2663 or +91 80 3796 2663 ;))

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