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China's Sinohydro plans IPO
by Staff Writers
Shanghai, China (UPI) Jul 27, 2011

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China's Sinohydro Corp. intends to issue a $2.7 billion initial public offering this year.

Analysts are predicting that the IPO would be China's largest this year.

Sinohydro intends to sell up to 3.5 billion shares in the IPO, or nearly 35 percent of its expanded share capital, to raise financing for future projects, a draft listing prospectus states.

The prospectus was posted on the Web site of the China Securities Regulatory Commission, which will review the IPO application Friday, the Shanghai Daily reported.

Sinohydro is the largest hydroelectric construction firm in China, having built 65 percent of China's medium and large dams, including the massive $23 billion Three Gorges Dam, the world's largest hydroelectric facility.

Three Gorges took 17 years to build and has a generating capacity of 22,500 megawatts, providing power to 11 provinces.

Sinohydro didn't give a price range of the proposed share sale but said it may raise around $2.6 billion to fund projects, including a hydro dam in Cambodia in addition to and replenishing the firm's working capital.

China Securities and the Bank of China International are the lead underwriters for the Sinohydro IPO.

In 2011 China intends to build 20 gigawatts of hydropower projects, nearly 1-10th of the total installed hydro capacity installed as of last December, the National Energy Administration said in January.

Last year Sinohydro posted a net income of $451.5 million, an annual increase of 27 percent over its 2009 income due to rising electrical demand from hydropower projects.

Sinohydro was founded in 1950, the year after the People's Republic of China was established, and has operations in Asia, Africa, Europe and North and South America.

Sinohydro is involved in other infrastructure projects beyond building hydroelectric facilities, most notably including the recently launched Beijing-Shanghai high-speed rail link.

Not all of Sinohydro's foreign projects have been resounding successes. Last month Sinohydro admitted that its construction techniques used to build Malaysia's Bakun Dam, soon to be the largest dam in Asia outside China, were laden with errors.

Sinohydro's acknowledgement followed Sarawak Report publishing an extensive report alleging that Sinohydro had added excessive water to cement used to build Bakun, weakening the concrete to such an extent that it was rejected by quality controllers for safety reasons.

Sinohydro has also come under severe criticism from environmentalists, who allege that Sinohydro's both cause environmental damage and displace large numbers of people.

Sinohydro's overseas business continues to expand and includes contracts in Africa, the Middle East, Eastern Europe and Southeast Asia, establishing a Chinese presence in many nations where none previously existed. Since the beginning of the year Sinohydro has signed contracts with companies such as Ukraine's Ukrhydroenergo to build a pump storage plant and Diar Real Estate to build roads and sewage systems in Qatar.

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