M&A

30 November, 2009

UPDATE 1-Wind power maker Honiton hires M.Stanley for sale

* Honiton is now wholly foreign-owned, based in Beijing

* Entire company is valued $200-$250 million

* Honiton's adviser: Morgan Stanley (Adds IPO plan, details and background)

By George Chen, Asia Private Equity Correspondent

HONG KONG, Nov 30 (Reuters) - Honiton Energy Group has hired Morgan Stanley (MS.N) to help the China-focused wind power developer lure a new investor, in a deal that could value the entire company at up to $250 million, two people familiar with the details said on Monday.

The company, currently 100 percent foreign-owned and headquartered in Beijing, has received first-round bids from several private equity firms, which valued it at between $200 million and $250 million, said the dealmakers.

The company wants to sell only a minority stake to a new investor because it is also aiming to list on a major international market in a year or two, said the two sources, who declined to be identified because the sale process is confidential.

Morgan Stanley declined to comment. Officials of Honiton, which focuses on wind power development in China, especially Inner Mongolia, could not be immediately reached for comment.

With 100 percent foreign ownership, "this allows the company to list on any foreign stock market effortlessly and without any shareholder restrictions," the company said in a statement on its website. (www.honitonenergy.com)

"As a renewable energy provider, Honiton will also enjoy preferential tax treatment from Chinese authorities," the company statement added.

The sources told Reuters the first-round bidders included both Chinese and foreign private equity and hedge funds, and a deal could be closed before the end of the year.

HOT SECTOR

Honiton owns the rights to five extensive properties in China's Inner Mongolia region.

With the potential for each property to produce up to hundreds of megawatts of power, the production of wind power could power millions of homes and thereby potentially reduce several million tonnes of carbon dioxide, the company website asserted.

Last year, global investments in renewable energy reached $119 billion, where a fifth was invested in the Asia Pacific region, according to a report by UNEP Sustainable Energy Finance Initiative.

China led new investment in Asia, rising 18 percent over 2007 to $15.6 billion, mostly in new wind projects and some biomass plants.

To support the sector's fast expansion, many wind power developers in China are working on plans to raise money from private investors or public listings, making new energy a hot area to receive a new wave of private equity investments.

China Longyuan Power Group, Asia's largest wind power generator and the world's fifth largest, is planning a $2.2 billion Hong Kong initial public offering. [ID:nHKG294534]

China Investment Corp, the country's sovereign fund, U.S. billionaire investor Wilbur Ross and others have already agreed to subscribe to part of Longyuan's IPO, reflecting the fact that global investors retain a strong interest in the sector, which some analysts said may be already overheated.

For related Asian private equity news, Reuters 3000 Xtra users can double click on: [LEN-RTRS-ASIA-PVE]

(Editing by Ken Wills) ((george.chen@reuters.com; +852 2843 6532; Reuters Messaging: george.chen.reuters.com@reuters.net)) ((If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com))

Source: http://www.reuters.com