Oct 20, 2020 07:51 PM

As Currency Controls Limit Access to Foreign Cash, Another State Firm Lists in London

Power generator SDIC Power has become the third Chinese state firm to launch an IPO in the British capital this year.
Power generator SDIC Power has become the third Chinese state firm to launch an IPO in the British capital this year.

As they face trouble getting their hands on offshore cash to fund their global expansions, China’s state-owned enterprises (SOEs) are continuing to take advantage of a mechanism that allows them to list in London.

Power generator SDIC Power Holdings Co. Ltd., the listed arm of centrally administered state-owned behemoth State Development and Investment Corp. Ltd., announced Tuesday that it had received the green light from the U.K. Financial Conduct Authority and will begin trading on Thursday.

That will make it the third SOE to list in the European city this year under the Shanghai-London Stock Connect scheme, which was launched in 2019, bringing the total to four.

Specializing in power generation, SDIC Power’s first-half profit soared 35.14% year-on-year to 3.08 billion yuan ($460 million), and debt-to-asset ratio dipped to 66.42% — still 10 percentage points higher than its rival China Yangtze Power Co. Ltd., which also went public in London last month.

The firm seeks to raise $200.6 million by issuing 16.35 million global depositary receipts, or 2.4% of the outstanding share capital. It priced the stock to the lower end of its pricing range at $12.27 each, according to a statement released on Monday. The takings will be used to expand its overseas business and repay offshore debts.

The majority of SDIC Power’s international business is in the U.K. and Thailand. A Scotland-based subsidiary owns the Inch Cape offshore wind farm, which the subsidiary’s website says has a planned annual capacity of 598 megawatts (MW), and the Afton offshore wind farm which has 50 MW of capacity. It also owns a share of the Beatrice offshore wind farm project.

Goldman Sachs International, UBS AG and HSBC Bank PLC will coordinate the listing, and the trio will join China International Capital Corp. (UK) Ltd. and CLSA Ltd. as joint underwriters, the statement said.

As a cornerstone investor, China Yangtze Power International (Hong Kong) Co. Ltd., has subscribed to $100 million worth of shares.

Struggling under China’s tightening foreign exchange controls, domestic companies are finding it difficult to get their hands on foreign currency, driving SOEs to go public abroad, several electricity analysts told Caixin. “Overseas projects need capital to maintain their business,” said one of the analysts.

That also led to a flood of Chinese private firms listing in the U.S. “Chinese companies prefer listing in the U.S. over the STAR board in Shanghai as the fund-raising will be in foreign currency … which could help their overseas expansion, and will be subject to less capital-control restrictions,” said Steven Leung, a Hong Kong-based executive director at UOB Kay Hian told Bloomberg previously.

Shares of SDIC Power closed up 1.89% on Shanghai’s main board Tuesday.

Bloomberg contributed to this story

Contact reporter Lu Yutong ( and editor Joshua Dummer (

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