A new energy subsidiary of Chinese publicly listed solar inverters developer Sungrow Power Supply has roped in its first external investors at a pre-money valuation of 19 billion yuan (over $2.6 billion), as the unit moves towards an onshore initial public offering (IPO).
Sungrow New Energy Development, whose businesses cover the design and production of power generation systems and equipment used in new energy power plants, is raising 347 million yuan ($48.3 million) in its first external financing from two state capital investors in eastern China, according to a stock exchange filing by its parent.
Anhui Tieji Xinneng Equity Investment, funded by a state-owned company in Anhui Province; and Zhejiang Fuzhe Fuchuang Equity Investment, whose biggest shareholder Fuzhe Capital is wholly owned by the state capital investor in Zhejiang Province, will purchase a combined 1.79% stake in Sungrow New Energy through the deal, according to the filing.
Sungrow Power Supply will remain the controlling shareholder, although its stake in the subsidiary will reduce marginally to 81.46%.
The fundraising development comes as Sungrow Power Supply prepares the new energy subsidiary for a spin-off and a separate listing on a stock exchange in mainland China.
Sungrow New Energy is expected to go public within three years upon the completion of this transaction, according to the filing. Otherwise, the new investors have the right to demand stock buybacks from the parent.
The separate listing plan came to light in early December 2023 when the parent announced its plan to split the new energy business for an onshore IPO, alongside a capital injection of 1 billion yuan ($139.2 million) into the unit.
The listing of Sungrow New Energy would allow the subsidiary to “expand its financing channels, speed up the business development, and elevate operations and financial performance”, said the parent in a December filing.
Sungrow New Energy booked 13.8 billion yuan ($1.9 billion) in revenue in the first nine months of 2023, which already beat the 12.9 billion yuan revenue recorded throughout 2022. The firm’s net profit stood at 702.7 million yuan ($97.8 million) in the first nine months, versus 641.2 million yuan in 2022.