Xinyi Solar plans to float PV project operations unit to finance glass production expansion

Solar glass manufacturer Xinyi Solar will ask shareholders this month to vote on a proposal to spin off its solar project operations business by way of a float that it hopes will raise RMB2.7 billion ($392 million) to expand its glass production capacity.

An extraordinary general meeting will be held on November 21 to consider a public offering of the parent company's Xinyi Energy (XYE) solar farm operations unit, that would be expected to raise HK$3.42 billion ($437 million).

The XYE business, which currently operates nine solar farms – including some floating PV – in China with an installed capacity of 954 MW, would remain a subsidiary of the Xinyi Solar Group with the details offered to shareholders not entirely clear on whether the parent company would retain a 53.7% holding or the balance. The information released to investors in the Hong Kong listed parent company states: “Xinyi Energy will become a company listed on the stock exchange and will continue to be a non wholly-owned subsidiary of the [parent] company expected to hold around 53.7% of the then XYE shares in issue.”

Xinyi bets on rising demand for solar glass

The newly-listed XYE business would use the proceeds of the share offering to acquire a six-project, 540 MW Chinese portfolio from its Xinyi Solar parent, for around RMB2.7 billion, with half of the money paid up front and the balance paid within four years of the share offering, with the rate dependent on Chinese public subsidy revenue.

Xinyi Solar says it would use around 45% of the windfall – RMB1.215 billion – to part finance three new solar glass production lines, which would each have a daily production output of 1,000 tons; would invest roughly the same amount into developing further utility scale PV projects; and would keep the remaining RMB270 million for “working capital”.

Under the new arrangement, provided the shareholders consent, Xinyi Solar would continue to develop large-scale solar projects, with XYE offered first option of buying them as they are grid connected. As part of the proposed deal, XYE would also provide operations and maintenance services for its parent company.

The Xinyi Solar board, which is clearly betting on rising global demand for solar glass despite a slowdown in its principal Chinese market, says the move would allow it to continue to benefit from XYE's operations as a major shareholder but would draw a line between businesses which attract different types of investor.