Panda Green Power, a direct wholly owned subsidiary of United Photovoltaics, will buy the stake in China New Energy from Asia Pacific Energy and Infrastructure Investment for HK$1.2 billion ($154.1 million). The group will also issue 559,701,493 consideration shares at HK$1.072 per share as part of the agreement, according to a statement to the Hong Kong stock exchange. The consideration shares represent about 7.42% of United PV’s issued share capital, and will be sold at a discount of roughly 9% to the average closing price of HK$1.178 per share in the five consecutive trading days prior to the announcement of the deal.
The transaction will involve a complex restructuring effort, under which China New Energy will buy a 75% stake in renewables investor Tibet Zangneng via its Tibet Shunji New Energy unit. Tibet Zangneng will then take a 90% equity interest in Batangxian Xihe Hydropower, which owns about 135 MW of hydropower capacity. It will also buy a 100% stake in Baiyuxian Zengquhe Hydropower and a 34.54% equity interest in CPI Xide Electricity, the latter of which owns about 412.5 MW of wind capacity.
Tibet Zangneng — a venture between two undisclosed companies owned by the regional government of Tibet — will then become an indirect subsidiary of China New Energy, with Batangxian Xihe Hydropower and Baiyuxian Zengquhe Hydropower to become subsidiaries of Tibet Zangneng. Baiyuxian Zengquhe owns about 512 MW of hydropower capacity.
Upon the completion of those transactions, China New Energy will indirectly acquire 110 MW of solar capacity. Those projects include both incomplete and operational assets, as well as the rights to develop undisclosed projects. It will also acquire 4.58 GW of hydropower capacity, in the form of unfinished and operational assets, as well as the development rights for projects.
United PV noted that Tibet Zangneng’s solar projects include 30 MW and 40 MW sites in Tibet, but did not disclose additional details. The group estimates the net assets of China New Energy, Tibet Zangneng and the projects under them to be worth about CNY 572 million ($82.9 million), contributing to an aggregate net profit after taxation in the range of 15 million yuan in the year to the end of December.
The Tibet Zangneng acquisition is United PV’s second deal this year to include non-solar assets. In March, group subsidiary Zhaolian Lvyi revealed plans to set up a partnership with China Zheyin Synergy Capital Management to invest in companies that are building PV, wind, hydropower and biomass projects.
However, United PV continues to invest heavily in new solar projects. In late April, it agreed to buy 200 MW of solar capacity from Beijing Zhongteng IOT Technology. It also announced plans to issue 700,000,000 shares to a unit of financial services group China Huarong, which is one of United PV’s biggest shareholders, along with China Merchants New Energy. And earlier this year, it made its first solar investment outside of China with the purchase of 82.4 MW of operational PV capacity in the U.K. from Luxembourg-based Notus Investments 2 S.à r.l.