Solar co Xinyi Energy revives Hong Kong IPO plan

Chinese solar power firm Xinyi Energy Holdings Ltd has decided to pursue an initial public offering (IPO) on the Hong Kong Stock Exchange (HKEX) after all, so on Friday it filed a renewed listing application.

On December 10, 2018 the spin-off of solar glass maker Xinyi Solar Holdings Ltd (HKG:00968) published a prospectus for the sale of 188.01 million shares in Hong Kong and over 1.69 billion international offer shares. A week later, however, it said it would not proceed with the listing due to the “continuing stock market volatility” at the time.

The IPO plan has now been renewed. Xinyi Solar said on Friday that with it Xinyi Energy will have its own fundraising platform to directly and independently access both the debt and equity capital markets. The solar power business holds and operates a portfolio of 954 MW of utility-scale ground-mounted solar farms in China and is to acquire 540 MW more with the proceeds.

The parent company explained that the market position and the valuation methodology of the two businesses are very different. Xinyi Solar, as a photovoltaic (PV) glass maker, is in the industrial sector and is typically valued by investors on price-to-earnings multiples. Xinyi Energy, on the other hand, is a dividend-oriented company which owns, acquires and operates stable revenue generating solar power plants. It will adopt a high dividend payout policy to distribute a substantial portion of its cash flow as dividend and will be valued on a distribution yield basis.

“A clear and transparent separation of the management structure will also enhance the decision-making process and the responsiveness to any market change,” Xinyi Solar added.

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