It is reported that China Power New Energy Development Co agreed to sell 3.2 billion new shares to China Three Gorges Corp for proceeds totaling HKD 2.1 billion with an eye on the potential benefits arising from hydropower projects.

According to a statement to the Hong Kong Stock Exchange recently, Hong Kong-listed China Power New Energy will sell 29.1% of its stake to the operator of the nation biggest dam. The renewable energy producer said it will use the proceeds to fund power generation projects.

China Power New Energy said in the statement that the share purchase will create opportunities for the company further expansion through leveraging the hydro power capabilities and expertise, adding that the move will help in identifying new projects for future acquisitions.

China Power New Energy gained 15.15% to 38 Hong Kong cents on Monday trading. The benchmark Hang Seng Index slightly retreated by 0.06%. The sale will leave State owned China Power Investment Corp as China Power New Energy second biggest holder with a 25.6% stake. China National Offshore Oil Corp, the nation's largest offshore oil producer will have 8.1%.

Ms Barbara Hon equity research analyst with Everbright Securities said that it is in line with China Power New Energy corporate strategy. She said the Hong Kong listed company is primarily engaged in renewable energy power production and its parent company, State-owned China Power Investment is more of a traditional power producer.

Ms Hon said "The agreement will help speed up asset injections from Three Georges to the Hong Kong-listed company, mainly small scaled hydropower projects with a capacity less than 300 megawatt, adding that it is too early to tell whether the agreement will bring synergy effects and contribute to profitability.”

(Sourced from China Daily)