GCL-Poly moves to become pure manufacturer

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The SNEC 2019 solar trade show in Shanghai this week was abuzz with news of anticipated consolidation in the world’s biggest PV marketplace as manufacturing giant GCL took big strides to move away from project development.

The turbulence experienced in Chinese PV project development – plus an anticipated worldwide boom in demand for solar materials – has persuaded GCL to move away from a vertically-integrated strategy to focus on manufacturing.

Trading in shares in the group’s Hong Kong-listed GCL-Poly Energy Holdings Ltd and GCL New Energy Holdings Ltd businesses was halted on Monday ahead of an announcement to divest a majority stake in the group’s project development business to Chinese state-owned energy company China Hua Neng Group Hong Kong Ltd.

On Tuesday, further details emerged at the same time as GCL-Poly revealed its intent to join forces with northern China wafer manufacturing JV partner Zhonghuan Semiconductor to plow a combined RMB9.13 billion ($1.32 billion) into expanding annual production capacity from 30 GW to 55 GW by 2022.

Proposed takeover

The share sale would involve GCL-Poly subsidiary Elite Time Mobile Ltd – which owns 62.28% of GCL-Poly development business GCL New Energy Holdings (GNE) – selling 51% of the shares in GNE to China Hua Neng, a Hong Kong division of Chinese power giant China Huaneng Group Co Ltd. Elite Time has entered a co-operation intent agreement with China Hua Neng to that effect with the takeover offer date set on Tuesday.

Elite Time will now issue monthly updates on the progress of the proposed sale, which could trigger an offer for the remaining stock in the solar project development business under takeover rules.

GCL-Poly and GNE last month announced plans to hold a shareholder vote on a proposal to sell a 70% stake in a 19-project, 977 MW solar project portfolio in China to Shanghai Rongyao New Energy Co and its partner Tibet Yunshang Investment Fund Management Co Ltd, to raise an anticipated RMB2 billion.

If approved by shareholders, the proceeds would be used to pay down some of the debts accumulated as GCL, like its major Chinese peers, aggressively expands manufacturing capacity for the solar materials needed to feed the thirst for solar capacity outside China. Announcing the planned portfolio sale, GCL-Poly and GNE revealed an intent for the project development business to transform into an “asset light” model and voiced the hope Tibet Yunshang would spend some of a reported RMB6 billion warchest to make further project acquisitions from GCL Group.