A US electricity company can say goodbye to an Indian investor - and hello to a Chinese one. The world’s second-biggest electricity producer, China Huaneng Group, is paying India’s GMR Group $1.2bn for its 50 per cent stake in Massachussetts-based InterGen.
“Unlike many Chinese acquirers internationally, Huaneng is not gaining control over resources or intellectual property,” Michael Parker, of analysts Sanford C. Bernstein, tells beyondbrics. He argues that Huaneng is buying foreign electricity producers to compensate for weakening performance in its domestic market. Chinese authorities are trying to make growth less energy intensive, and the last year’s stimulus-fuelled boom in energy use is unlikely to be sustained.
The move - which was announced on Sunday, following two weeks of rumours - is Huaneng’s biggest foreign purchase since 2008, when it paid $3.1bn for Singapore’s Tuas Power. It would increase Huaneng’s current capacity by 6 per cent - adding 6,312MW of capacity at power plants in Mexico, the Netherlands, the Philippines and Australia. Huaneng is also said to be bidding for $6bn worth of other Australian assets, which are being auctioned by the New South Wales government.