China Yangtze Power to Boost Capacity by More Than Half With Acquisitions

China Yangtze Power Co. Ltd. (600900.SH), the world's largest listed hydropower company by capacity, announced plans to acquire two hydroelectric stations from its controlling shareholder China Three Gorges Corp., which would see its total installed capacity jump by more than half.

Shares of Yangtze Power will be suspended from trading for up to 10 trading days while Three Gorges works on a plan to inject the financial assets of Wudongde and Baihetan hydropower stations into the Shanghai-listed firm, according to a Monday exchange filing (link in Chinese).

Yangtze Power would acquire Three Gorges Jinsha River Yunchuan Hydropower Development Co. Ltd., the company that owns the two hydroelectric stations, either through stock, bonds, or cash, according to the statement.

Three Gorges Corp. also owns a 70% stake in the Jinsha River Yunchuan hydropower company, with the remaining 30% equally split between Yunnan Energy Investment Group Corp. and Sichuan Energy Investment Group Corp., Caixin Data shows.

The purpose of the deal is to avoid business competition, integrate resources, and boost the impact of large-scale hydropower projects, Yangztze Power said in the statement.

It also warned that they have not entered into any official contract yet, and there are many moving parts to the deal, such as the pending approval from regulators.

The hydropower giant will see its installed capacity jump by 57.5% after it acquires the Baihetan and Wudongde stations, the second and fourth-largest hydropower stations in the country by capacity, respectively, according to corporate websites.

Both stations sit on the Jinsha River near the border of Southwest China's Yunnan and Sichuan provinces. As of June, construction of the Wudonghe hydropower station has been completed and all 12 generators were producing electricity, while only the second phase of Baihetan station has gone into operation. All units of Baihetan station are expected to be operational by July 2022.

Currently, Yangtze Power operates four hydropower stations, including the world's largest comprehensive hydro-complex project Three Gorges Dam, along with Gezhouba, Xiangjiaba, and Xiluodu, with a combined installed capacity of 45.6 million kilowatts, which accounts for nearly 12% of the country's total hydropower capacity, according to its website.

In the nine months through September, Yangtze Power posted 20.6 billion yuan ($3.23 billion) in revenue, a drop of 10.5% from the same period last year. Its net profits were also down 11% yearly to nearly 11 billion yuan, figures from its third-quarter earnings showed.

Contact reporter Manyun Zou (manyunzou@caixin.com) and editor Flynn Murphy (flynnmurphy@caixin.com)

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