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Brief TMT & Internet: Huaneng Renewables Targeted Amidst Clean Energy Privatisations and more

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In this briefing:

  1. Huaneng Renewables Targeted Amidst Clean Energy Privatisations
  2. Australian Unity (Finally) Enters An SIA With Charter Hall and Abacus

1. Huaneng Renewables Targeted Amidst Clean Energy Privatisations

Following the suspension of its shares last Friday morning pursuant to the Hong Kong Code on Takeovers and Mergers, Huaneng Renewables Corp H (958 HK) has announced its major shareholder, China Huaneng with 52.7%, has indicated its intention to make a conditional voluntary cash general offer for all the H shares, other than those H shares already owned, which could result in a privatization and delisting of HRC. 

No price was mentioned. Shares closed yesterday at $2.64, up 21.7%.

This is the third Hong Kong-listed, clean-energy company subject to a privatisation or change of control in the past six months. 

SOE State Power Investment Corporation successfully privatised China Power New Energy Development Co (735 HK) by way of a Scheme last month as discussed in China Power New Energy To Be Delisted After SOE Injection Abandoned. The $5.45/share Offer was at a 41.9% premium to last close and a 78.1% premium to the 30-day average.

In addition, Gcl Poly Energy Holdings Limited (3800 HK), the 62.28% shareholder of Gcl New Energy Holdings (451 HK), entered into a Cooperation Intent Agreement back in June with China Hua Neng Group (a subsidiary of SOE China Huaneng Group – the same shareholder of HRC) to sell 51% of GNE, the completion of which would trigger an unconditional MGO for GNE. Late last week, 20% of shares out, or 3.8bn shares, in GNE were transferred from HSBC to Get Nice Securities. This is part of GCL’s stake. This ongoing transaction has been discussed in StubWorld: New Interest In GCL’s New Energy and New Development In GCL’s New Energy

HRC is PRC-incorporated therefore any Offer to delist would be tabled by way of a Merger by Absorption, a hybrid offer incorporating a scheme-like vote and an acceptance condition. One would assume China Huaneng has studied the near-miss privatisation of Harbin Electric Co Ltd H (1133 HK).

This is a pre-event situation and a formal Offer may be left wanting. However, there appears a movement towards privatising clean energy plays. Should a formal Offer be presented, I would expect an Offer price with at least a $3 handle, above where HRC traded a year ago.

2. Australian Unity (Finally) Enters An SIA With Charter Hall and Abacus

Back on the 4 June, Abacus Property (ABP AU) and Charter Hall (CHC AU) made a $2.95/unit all-cash non-binding proposal (a 6.1% premium to last close and a 10.5% premium to the NTA) for Australian Unity Office Fund (AOF AU), by way of a Scheme. ABP and CHC also announced they held 19.9% in AOF. The June distribution of A$0.0395/unit announced on the 21 June with an ex-date of 27 June, was to be added.

My read at the time was that the Offer might still require a small kiss to get up.  And, sure enough, ABP/CHC announced on the 3 July an A$3.04/unit Offer. This Offer Price would be reduced by any further distribution. The proposal was also “best and final“.

The Offer was indictive and non-binding, and primarily subject to the satisfactory completion of confirmatory due diligence.

On the 17 July, AOF gave ABP/CHC a four-week, non-exclusive period to conduct due diligence, with a goal to agreeing and entering into a Scheme Implementation Agreement (SIA). In effect, AOF was ready to recommend ABP/CHC’s Offer, in the absence of a superior Offer:

The four-week due diligence ended on the 13 August. AOF, via Auirel, its responsible entity, announced it was finalising the provisions of the outstanding due diligence information with ABP/CHC.

Yesterday, AOF entered into an SIA with ABP/CHC. The terms remain at $3.04.

The Scheme Meeting is expected to be held on the 1 November with an indicative completion date of 18 November.

This is a done deal and trading accordingly with a gross/annualised return of 1%/4.8%. 

Originally Posted on October 2, 2019 – Brief TMT & Internet: Huaneng Renewables Targeted Amidst Clean Energy Privatisations and more

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