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Cleantech matters: China: the new global leader in cleantech IPOs - EY - Global

Cleantech matters: Seizing transformational opportunities

China: the new global leader in cleantech IPOs

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2010 Chinese pure-playcleantech IPOs

Issuer name Cleantech segment Primary exchange IPO proceeds (US$m) Market cap (US$m)
Xinjiang Goldwind Science & Technology Co. Ltd. Wind Hong Kong Stock Exchange $1,053.6 $6,107.6
China Datang Corp Renewable Power Co. Ltd. Wind Hong Kong Stock Exchange $642.2 $2,140.9
China Suntien Green Energy Corp. Ltd. Wind Hong Kong Stock Exchange $424.7 $1,055.3
Shanghai Chaori Solar Energy Science & Technology Co. Ltd. Solar Shenzhen $356.0 $1,421.7
China Ming Yang Wind Power Group Ltd. Wind NYSE $350.0 $1,750.0
Risen Energy Co. Ltd. Solar Shenzhen $278.3 $1,082.4
Trony Solar Holdings Co. Ltd. Solar Hong Kong Stock Exchange $256.8 $885.7
Xiamen Changelight Co. Ltd Energy efficiency products Shenzhen $195.8 $783.3
Shanghai Taisheng Wind Power Equipment Co. Ltd. Wind Shenzhen $139.0 $555.9
ZheJiang Sunflower Light Energy Science & Technology Co. Ltd. Solar Shenzhen $126.5 $1,262.4
Dalian East New Energy Development Co. Ltd. Power and efficiency management services Shenzhen $122.4 $481.5
Shenzhen Green Eco-manufacture Hi-tech Co. Ltd. Environment Shenzhen $109.3 $437.3
Beijing Easpring Material Technology Co. Ltd. Energy storage Shenzhen $105.5 $422.0
China Hydroelectric Corp. Hydro NYSE $96.0 $766.9
Daqo New Energy Corp. Solar NYSE $87.4 $322.5
Chaowei Power Holdings Ltd. Energy storage Hong Kong Stock Exchange $71.5 $280.1

Source: CapIQ;BNEF

2010 Chinese pure-play cleantech IPOs by segment

Cleantech segment IPOs Pct. Proceeds (US$m) Pct.
Energy efficiency products 3 15% $240.7 5%
Energy storage 2 10% $177.0 4%
Environment 1 5% $109.3 2%
Hydro 1 5% $96.0 2%
Power and efficiency management services 1 5% $122.4 3%
Solar 6 30% $1,169.2 25%
Wind 6 30% $2,804.0 59%
Total 20 100% $4,718.6 100%

2010 Chinese pure-play cleantech IPOs by exchange

Exchange IPOs Pct. Market cap. (US$m)* Pct.
Hong Kong SE 6 30% $10,591 59%
NYSE 5 20% $118 4
Shenzhen 9 45% $7,216 40
Total 20 100% $17,925 100%

*Market capitalization at the company IPO date
Source: CapIQ;BNEF




China generated 20 of the 38 global pure-play cleantech IPOs completed in 2010.

China is a market rife with opportunities for cleantech companies. In 2010, it grabbed the number one spot on our Renewable Energy Attractiveness Index and was the largest recipient of clean energy investment in 2010.

Combined with strong investor interest in China's booming economy, these factors have led to a record-breaking spate of Chinese cleantech IPOs that is likely to continue.

China generated 20 of the 38 global pure-play cleantech IPOs completed in 20101. Raising US$4.7 billion, Chinese transactions accounted for 49% of total global cleantech IPO proceeds. Solar, wind, energy storage and energy efficiency companies made up the majority of offerings, reflecting the major areas of cleantech development in China.

A breakthrough year for wind

Although China's solar company offerings have garnered the most attention in recent years, 2010 was notable as a breakout year for wind financings.

The six Chinese wind offerings raised US$2.8 billion, 59% of the cleantech total.

2010 Chinese pure-play
IPOs by segment

2010 Chinese pure-play
cleantech IPOs

The market view is that these are just the beginning of a long line of wind company IPOs. The biggest deals are seen likely to come from wind farm operators and developers rather than wind technology companies. Analysts point to a pipeline of big wind offerings that could include spin-offs of the subsidiaries of China's five large generating companies or the renewable units of other energy conglomerates.

Bullish on wind

Investors are bullish on wind for several reasons.

  • The Chinese government is targeting steep increases in wind energy production by 2015, suggesting that government financial support for the industry will remain stable, at least for the medium term.
  • Many of the large wind players are state-owned enterprises, which provides further assurance that they will enjoy continuing government support.
  • The Chinese wind industry is just beginning the process of meeting the technological capabilities of Western competitors and then beating them on price, suggesting strong future gains in market share for Chinese wind companies.

Chinese solar companies conducted six IPOs raising a total of US$1.2 billion. Notable among them were the US$356 million offering by Shanghai Chaori Solar Energy Science & Technology Co. Ltd. and the US$278 million offering by Risen Energy Co. Ltd., both on the Shenzhen exchange. While solar offerings were as numerous as wind offerings, they raised less than half the capital.

Less bullish on solar

The market view on potential solar IPOs is less bullish.

  • While solar companies drove cleantech IPO activity in China and globally during the period 2005–2007, the key Chinese solar players are now listed.
  • Following years of falling solar module prices and margin contraction, there is likely to be some consolidation and shake-out in the solar industry in China and elsewhere.
  • Chinese solar companies have already realized the major gains to be made through achieving technological parity with their Western counterparts at a lower price. It is hard for new entrants to excite the market in such an environment.

Growing mainland China cleantech listings

2010 was a breakout year for mainland China stock exchanges. The Shenzhen exchange hosted 9 IPOs raising US$1.6 billion.


2010 Chinese pure-play
cleantech IPOs by exchange

The cleantech IPO activity on mainland exchanges reflects the importance of the domestic cleantech market in China.

The majority of the Chinese mainland stock exchange trading volumes come from retail (i.e., individual) investors. These investors have provided the mainland exchanges with extra impetus in recent years as they've increased their stakes in domestic companies in the wake of the financial crisis in the US and Europe.

In contrast, Chinese cleantech companies with international market ambitions most frequently list on an "offshore" stock exchange, such as the Hong Kong Stock Exchange, NASDAQ or NYSE, where they demonstrate their ability to operate under the highest levels of corporate governance.

As cleantech companies continue to demonstrate the ability to raise significant amounts of capital on the mainland exchanges, ones already listed offshore will likely seek to establish a second domestic listing in the onshore market in China.

Government policy sets the stage

The recent surge in Chinese cleantech IPO activity is the product of a long-term Chinese Government strategy to develop a cleantech industry and deploy cleantech broadly across the economy. For example:

  • The 2010 National Renewable Energy Action Plan allocates US$735 billion of government spending directly to saving energy, reducing emissions and other energy and ecology projects for 2011–2020.
  • Many cleantech companies enjoy a preferential tax rate of 15% (compared with a 25% tax on other corporations).
  • Cleantech firms are offered ready access to finance through state-owned bank loans at low interest rate.

As a result of government policies such as these, Chinese cleantech companies can grow quickly by tapping into surging demand with significantly lower capital outlays.

Venture capital firms building the cleantech IPO pipeline

Today, both international and domestic venture capital firms see opportunities to leverage government policies in their cleantech investments and to help China's cleantech sector transform from one based on low-cost manufacturing to one succeeding through innovation.

In 2010, Chinese cleantech companies received US$410 million in venture financing, according to Dow Jones VentureSource, making China the third- largest cleantech venture market after the US and Europe.

Chinese cleantech IPO outlook is highly promising

The fast flow of cleantech IPOs from China looks set to continue, barring a major economic setback or reversal of government policy, for several key reasons:

  • Cleantech is likely to keep benefiting from the current flood of Chinese IPOs across industries.
  • The unparalleled government and private sector investment in cleantech in China is creating an industry that is broad and deep, encompassing a range of segments with promising growth prospects.
  • The domestic challenges that China's cleantech industry is being developed to address — growing energy consumption, energy security, resource scarcity, environmental degradation and carbon dioxide emissions — are also the world's.


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1Defined as companies designated as clean energy A-1 Main Driver (50%–100% of value)by BNEF

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