Corporate Finance : Chinas Solar-energy Ipos Getting Bigger

Global equity/drs

China-based manufacturers of products that convert the sun’s rays to electricity are raising growing sums of money on Wall Street to expand their production facilities to meet expanding demand for alternative energy in the face of rising concern about global warming, air pollution and continuing high oil and gas prices.

Yingli Green Energy Holding, based in Baoding, China, raised $319 million on June 8 in an offering of American depositary shares on the New York Stock Exchange. The vertically integrated maker of photovoltaic products was the fourth China-based solar-energy company to make an initial public offering in New York so far this year. In addition, Trina Solar, a unit of Changzhou Trina Solar Energy, which raised $98 million in its IPO on the NYSE last December, returned with a follow-on offering of $243 million on May 31. Merrill Lynch was the global coordinator and bookrunner for the Trina Solar issue. Cowen and Deutsche Bank were the joint lead managers, and CLSA Asia-Pacific Markets was co-manager.

Meanwhile, New York City mayor Michael Bloomberg last month announced plans to solicit bids this fall from private solar-energy project developers to build, own, operate and maintain solar panels on up to 50 city-owned buildings. “We have plenty of space available on our roofs for solar panels, and solar energy is most available when the city needs it most—on hot, sunny days,” Bloomberg says.

In the biggest IPO by a Chinese solar-energy-related company so far this year, LDK Solar, which sells multicrystalline solar wafers to makers of solar cells and solar modules, raised $469 million in its IPO on June 1. Morgan Stanley and UBS were lead underwriters for the offering. Piper Jaffray, CIBC World Markets and CLSA Asia-Pacific Markets also sold shares to investors. JPMorgan Chase is the depositary bank for the NYSE-listed American depositary receipt program.

On May 17 Nanjing-based China Sunergy raised $108 million in its market debut on Nasdaq. The solar-cell manufacturer sells its products to Chinese and overseas module manufacturers and systems integrators. JPMorgan Chase is the depositary bank for the ADR program.

In February JA Solar Holdings, a solar-cell maker based in Hebei, China, raised $238 million in its US market debut on Nasdaq. The Bank of New York is the depositary bank for JA Solar’s ADR program. Each ADR represents six common shares.
Meanwhile, Taiwan-based Motech Industries plans to build a plant in China to produce silicon wafer ingots, which are used in solar cells. The company is the largest solar-cell manufacturer in Taiwan. Motech Industries in May appointed Citi as depositary for its bifurcated global depositary share facility. The approximately $211 million of securities were simultaneously offered in the form of Rule 144A GDSs to qualified international buyers in the United States and in the form of Regulation S GDSs on the Euro MTF market of the Luxembourg Stock Exchange. The company’s ordinary shares trade on the GreiTai Securities Market, Taiwan’s over-the-counter market.

China plans to spend about $200 billion on renewable energy over the next 15 years, including solar energy and wind power, as well as biomass. Its solar-power ambitions could be limited, however, because of a shortage of polysilicon, the raw material used to make solar cells. Meanwhile, competitors in the US and elsewhere are developing alternative solar-power technologies that rely less on silicon, such as thin-film applications, that could ultimately have lower production costs.

In other DR news, JPMorgan announced that it has successfully re-opened ADR issuances and cancellations for Turkcell Iletisim Hizmetleri, or Turkcell, the leading mobile communications provider in Turkey. Since January 2006 all issuance and cancellation activity for Turkish DR programs had been halted following the introduction of a new Turkish tax regime.


Gordon Platt