Possible IPO For One Of China’s Major Power Distributors

State Grid Corp. planning to sell power generation assets worth over $1.2 billion this year.

Beijing (AP) – State Grid Corp., which runs most of China’s vast power-distribution network, plans to raise at least $5 billion from investors with an initial public offering in 2008, a news report said Monday.

China’s power industry is tightly regulated, but suppliers could see profits rise if the government goes ahead with plans to loosen controls on prices in a bid to promote efficiency. China is the world’s second-biggest consumer of electric power after the United States.

Regulators want State Grid to sell its first shares on a Chinese exchange but the company wants to make its debut abroad, according to the South China Morning Post, a Hong Kong-based paper.

State Grid’s IPO would include its distribution networks in China’s richest eastern provinces, the Post reported, citing unidentified sources.

One source was quoted as saying the company was talking with bankers about planning an IPO in 2008, the paper said.

China’s biggest companies are in the midst of a wave of IPOs on Chinese and foreign stock exchanges that have raised billions of dollars to modernize and expand their operations.

State Grid’s smaller counterpart, China Southern Power Grid Corp., is believed to be planning its own IPO in Hong Kong to raise up to $3 billion as early as next year. It provides energy to five southern provinces –Guangdong, Hainan, Guangxi, Yunnan and Guizhou. State Grid covers the rest of the country.

State Grid’s profits in the first half this year rose 28 percent to $1 billion, according to the Post.

The report of a possible State Grid IPO comes amid efforts by China to overhaul its inefficient power utilities by splitting generation assets from the distribution network.

State Grid plans to sell power generation assets worth more than $1.2 billion this year, state media reported this month.

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