China Shenhua Energy, the nation's largest coal producer, has unveiled a long-awaited plan to list shares in the mainland in a deal worth 47.8 billion yuan, making it the latest Hong Kong-listed state-owned heavyweight to return to the A-share market.
Shenhua Energy also announced plans to spend 3.32 billion yuan to buy assets from its parent, including a 2.02 billion yuan coal mine in Inner Mongolia that will boost its marketable reserves by 6.19 per cent, and a string of power plants and coal production facilities.
Shenhua Energy, in a Hong Kong stock exchange announcement, said that it planned to issue up to 1.8 billion A shares for listing in Shanghai. Its A-share listing plan comes in the wake of those of China Construction Bank and PetroChina.
Shenhua Energy said the proceeds would be invested in its coal, power and transport businesses, to buy strategic assets on the mainland and overseas and bolster working capital.
The company did not give a price estimate for the proposed A shares which generally are set at a discount to H shares. Based on Shenhua Energy's last closing price of HK$27.30 in Hong Kong, the deal is worth 47.8 billion yuan.
Assuming the company sells 1.8 billion A shares, the deal will dilute shares held by existing shareholders by only 1 per cent.
After the share sale, all of Shenhua Energy's shares will become tradable. Currently 81.2 per cent of the company's 18.08 billion issued shares are non-tradable state shares.
