China Resources New Energy's shares nearly tripled on their Shenzhen stock exchange debut on Thursday after the wind and solar power company raised 24.5 billion yuan ($3.61 billion) in Asia's largest initial public offering (IPO) so far this year, according to Reuters.
The stock opened at 21.60 yuan, sharply above its IPO price of 10.11 yuan, and climbed as much as 198% during early trading, triggering a temporary trading halt under exchange rules.
The strong market debut stood in contrast to weakness in the broader Chinese equity market, with the blue-chip CSI300 index falling nearly 2% in morning trade. According to Reuters, the listing is being closely watched as a test of Beijing's efforts to revive domestic capital markets, attract major mainland listings and encourage household savings to flow back into equities following a prolonged slowdown in IPO activity.
Data from LSEG showed that IPOs on the Shanghai, Shenzhen and Beijing stock exchanges raised $7.7 billion during the first half of the year, marking a 64.4% increase from the same period last year. Overall IPO proceeds by Chinese companies, including offshore listings, nearly doubled to $16.2 billion.
The successful debut is expected to bolster confidence in China's equity fundraising market and could pave the way for larger offerings, including memory chip manufacturer ChangXin Memory Technologies (CXMT), which is planning a 29.5 billion yuan IPO in Shanghai, according to Reuters.
China Resources New Energy, controlled by Hong Kong-listed China Resources Power and ultimately part of the state-owned China Resources Group, develops, owns and operates wind and solar power projects across China.
According to LSEG data cited by Reuters, the offering is Shenzhen's largest IPO on record. Retail investor demand was exceptionally strong, with applications worth about 6.4 trillion yuan submitted for the online portion of the sale, making that tranche more than 683 times oversubscribed.
The company sold 2.11 billion shares before any over-allotment option, representing about 16.2% of its enlarged share capital. If the over-allotment option is exercised in full, the total number of shares sold will increase to 2.42 billion.
The proceeds from the listing will be used to fund investments in new wind and solar energy projects.
The IPO comes as China pushes towards its target of generating half of its electricity from non-fossil fuel sources by 2030. However, renewable power producers continue to face challenges including declining electricity prices, grid capacity constraints and intense competition within the sector.
