China Power buys stake in firm
Updated: 2008-01-02 10:09
China Power International Development Ltd agreed to pay 749.5 million yuan ($102.53 million) to buy 25 percent of Guangzhou Power Enterprise (Group) Ltd, in an attempt to boost its business in the region.
China Power, China Power Investment Corp's Hong Kong-listed arm, will use the deal as a launch pad to expand in Guangzhou and the Pearl River Delta, the company said in a statement to the Hong Kong stock exchange.
The acquisition is subject to government approval, it said.
Power consumption in Guangzhou, an industrial hub, grew 12.5 percent between 2001 and 2005, the statement said.
Guangzhou Power, wholly owned by Guangzhou Development Group Ltd, is a major power producer in the city.
China's power companies are increasing their capacity to supply the world's fastest-growing major economy. As of the end of 2006, the total installed capacity of China Power was 5,348 megawatts (MW). The company's total revenue was 5.2 billion yuan, an increase of 19.3 percent from the year before, according to the company's 2006 annual report.
Its parent, China Power Investment, had a total installed power capacity of 37,800 MW as of the end of 2006. The company's total assets were 177.8 billion yuan.
China Power is eager to expand its installed capacity through acquisitions and greenfield projects, in order to strengthen its market position in the power industry, the company has said.
China Power is continuously seeking opportunities to acquire premium power generation assets in prosperous areas, it said.
The company said it will stop treating Shanghai Electric Power Co as an associated company in its financial accounts. Instead, the Shanghai Electric stake will be treated as an available-for-sale investment, China Power said in another statement to the Hong Kong stock exchange.
The company paid 1.67 billion yuan in November 2006 for a 25 percent stake in Shanghai Electric. It said in September it incurred a loss of 162.9 million yuan in the first half from the investment.
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