by Zhang Shidong at scmp.com
Chinese solar silicon wafer manufacturer Longi Green Energy Technology, plans to raise as much as 20 billion yuan (US$2.8 billion) via the sale of global depository receipts (GDRs) in Switzerland, joining a growing list of companies that are diversifying funding sources away from US markets.
At least 40 Chinese listed companies have unveiled plans to sell GDRs this year, as escalating tensions between China and the US have prompted domestic firms to look past Wall Street and Nasdaq for their funding requirements. The London and Swiss exchanges have now replaced the two US bourses as the popular choice of venues for Chinese companies seeking capital. Sichuan Road & Bridge and Zhejiang Sanhua Intelligence Controls also disclosed plans to sell GDRs on the Swiss stock exchange on Wednesday.
Last month, the Shanghai and Shenzhen exchanges issued guidelines for GDR sales, paving the way for more companies to ride the fund diversifying wave. Companies need to have at least one year of listing history and a market cap of more than 20 billion yuan to make such an issuance.
Longi said in a statement that the amount of GDRs on offer will translate into an equivalent of a maximum 8 per cent of the company’s outstanding shares, or 606.5 million yuan-denominated shares. Each GDR represents five underlying shares, it said in the statement to the Shanghai Stock Exchange on Wednesday.
Timing of the GDR sale will depend on the condition of the capital markets both home and abroad and the progress on the regulatory approvals and the offering will be open to global investors with listing planned on the Swiss stock exchange after the flotation is completed. The GDRs can be converted to yuan-denominated shares tradeable on the Shanghai exchanges 120 days after the listing, according to the statement.
Longi is the world’s biggest manufacturer of wafers or silicon squares that are put together to form solar panels. The company, which is based in the northwest Shaanxi province, will use the GDR proceeds to fund construction of five projects in Inner Mongolia, Malaysia and Vietnam, for the manufacture of monocrystalline silicon rods, cells and modules.
Following the announcement, shares of Longi dropped 2.6 per cent to 27.99 yuan in Shanghai, taking the decline to 34 per cent this year. The stock had surged about 10 fold in the past two years through June 2022 on optimism that China’s carbon neutrality initiative would fuel demand for photovoltaic products.
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