China's CIC to invest in 2 clean-energy firms

By YVONNE LEE
HONG KONG—Sovereign-wealth fund China Investment Corp. aims to tap rising demand for clean energy in the country by investing as much as $1.21 billion in two companies in the renewable-energy sector, people familiar with the matter say.
The transactions are among the US$300 billion sovereign-wealth fund's first equity investments in a domestic power producer and underscore China's support for renewable energy.
Hong Kong-listed GCL-Poly Energy Holdings Ltd. said CIC would buy a 20% stake in the co-generation power-plant operator in a deal valued at 5.56 billion Hong Kong dollars (US$717 million).
The company also said it agreed to set up a joint venture company with CIC to develop solar-energy projects.
Additionally, CIC agreed to buy US$300 million to US$500 million of shares in China Longyuan Power Group Corp.'s initial public offering, two people familiar with the situation told Dow Jones Newswires on Thursday.
CIC said it declined to comment on market speculation.
China Longyuan Power, a wind energy company, is seeking to raise US$1.3 billion in an IPO ahead of a Hong Kong listing Dec. 10, the people said. Premarketing of the deal began Monday, they added.
Longyuan is China's largest producer of electricity generated by wind power and is the renewable-energy arm of China Guodian Corp., one of the five biggest state-owned power generators in China in terms of capacity.
China is a major center for renewable-energy development, as the government seeks to diversify its fuel mix with investments in renewables infrastructure as part of its four trillion yuan (US$586 billion) economic-stimulus plan.
CIC's plans to invest in GCL-Poly Energy and Longyuan are seen as efforts by the Chinese government to support the development of the domestic clean-energy sector, analysts said.
"As the government is focused on supporting renewable energy, it is no surprise that CIC will announce more investments in this sector in the near term," said Lee Yuk Kei, an analyst at Core-Pacific Yamaichi International Ltd.
At the same time, CIC is rapidly deploying capital to take advantage of the global economic recovery by buying into natural resources and property assets.
CIC Chairman Lou Jiwei said in October that the sovereign-wealth fund had allocated US$110 billion for overseas investments and had deployed around half that sum. Commodities have been a focus of the fund's investing strategy and asset allocation, he said.