U.S. Energy Company Seeks to Raise US$200 Million on Hong Kong Listing

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Feb. 2 – The U.S.-based energy company, China Hydroelectric, has announced plans to raise US$200 million through a listing in the Hong Kong stock exchange.

Deutsche Bank and Merrill Lynch have been appointed to manage the sale, with a listing scheduled for three-four months time. The company, was formed to take advantage of a unique opportunity in the redevelopment of China’s energy industry which  seeking to benefit from the Chinese renewable energy law which came into effect in 2006.

The company is believed to have significant links to the Chinese government and appears well placed to take advantage of China’s desire to lessen its dependence on coal and to develop alternative energy resources. Beijing plans to triple hydropower capacity to 300 gigawatts within the next ten years. Currently, hydropower provides electricity for about 25% of China’s population with coal providing the bulk, at huge environmental costs.

The move is seen as a boost for a battered institutional Wall Street, where, should the placing of shares go ahead as planned, investors are expected to take up stock, albeit in a Hong Kong listing.

It would also bring renewed confidence that mainland China represents a still significant emerging market during what has been a tumultuous few months in the global economy. US investors have been looking at development projects overseas for the past few months as the traditional markets of the US and Europe decline.

A successful placement in Hong Kong – which is still subject “to market conditions” – would be a major boost of confidence that growth will still continue in markets such as China, and that recent recessionary problems will not manifest themselves on a global scale but will be limited to markets with exposure to Western originated bad debt.