According to Bloomberg News, Huaneng Group plans to acquire 50% of the shares of InterGen, a Massachusetts-based company, from India’s GMR Infrastructure (“GMRâ€) for a total of US$1.4 billion.
On August 19, when this newspaper asked the press office of Huaneng Group to verify the news, the relevant person in charge stated that it had “not heard yetâ€.
In fact, Huaneng and InterGen have already been closely related. As early as 2003, Huaneng’s first overseas acquisition was the acquisition of a 50% equity interest in InterGen, a wholly-owned subsidiary of Australian Power, for 227 million U.S. dollars. The equity capacity was approximately 933,000 kilowatts, and achieved a good return on investment, achieving “overseas projects ahead of scheduleâ€. Three-year profit" goal.
If the company wins 50% equity of InterGen, it will enable Huaneng to expand its share of InterGen's power generation assets from Australia to the world and become the largest overseas acquisition of Chinese companies in two years. According to the data, InterGen has 12 power plants in Hong Kong, the Netherlands, the Philippines, Mexico, and Australia, and operates about 6 million kilowatts of power generating units.
In recent years, InterGen has undergone several equity restructurings. In 2005, AIG and the Ontario Teachers` Pension Plan spent $1.75 billion to acquire 100% equity in InterGen, each with 50% stake. In October 2008, GMR took over 50% of InterGen's equity held by AIG for US$1.1 billion.
This time, GMR sold its only three-year equity stake through Merrill Lynch, publicly quoted at $1 billion. Why is GMR so eager to sell this part of the equity, an industry analyst analyzed the newspaper and said: "GMR's current total debt is more than 1 billion U.S. dollars. This sale is likely to relieve its own debt pressure."
However, he also pointed out that if Huaneng eventually took over 1.4 billion U.S. dollars, the transaction may not be worthwhile, because the price is 40% higher than the public offer of GMR. At present, neither GMR nor Huaneng has confirmed that this transaction has been settled.
In addition to the news of the bid for InterGen’s equity, on August 19, Foreign Power also cited the statement of Eric Roozendaal, Treasurer of New South Wales, Australia, indicating that TruEnergy, a subsidiary of Huaneng Group, Shenhua Group and China Light Holdings (0002.HK), has become the Potential bidders for state privatization of AUD 8 billion in electricity.
At present, the internationalization strategy including the acquisition of overseas assets has become an important part of Huaneng's development strategy. Previously, Huaneng had several successful overseas mergers and acquisitions, mainly in the power and coal sectors.
March 14, 2008, Huaneng Group beat the competition with Singapore Temasek agreed $ 3.1 billion acquisition of 100% stake in Singapore's Tuas Power. The company has 2.67 million kilowatts of power generation capacity, accounting for 25% of the Singapore market.
April 28, 2009, Huaneng to invest in Myanmar last shweli hydropower generating units officially put into operation, making China the largest investment in hydropower projects in Myanmar BOT successfully completed.
Earlier, Cao Peixi, general manager of Huaneng Group, said in an interview with the media that Huaneng will choose the countries and regions where the market environment is more mature, continue to focus on the familiar power and coal fields, carry out long-term investment in the real economy, and finance for short-term arbitrage. Derivatives and equity investments are cautious.
At present, Huaneng Group is China's largest power producer. As of the end of June 2009, China Huaneng had a total of 130 wholly-owned and controlled power plants in China and overseas.
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