China Putting Brakes on Green IPOs as some Green sectors face overcapacity

China has put on hold new IPO’s from its fast growing Green Industry to prevent overcapacity and weed out small players.Though Goldwind (China’s second largest wind turbine producer) has received approval for the Biggest Green IPO in 2010 in HongKong later this month,others are facing hurdles.While no official communication has been released,Reuters reported that the “Go Slow” on Green IPOs had been sent to investment bankers and industry executives.China has been trying to slow down the overcapacity plaguing some Green sectors like Wind Equipment and Polysilicon.The number of players in the Wind Equipment has risen to almost 60 many of which are Small and run on paper thin margins.Same is the case with the PolySilicon sector which has many Entrants running small,uneconomic and environmentally unfriendly plants.

Prevention of capital raising for these cash strapped players will lead to consolidation and benefit the larger companies like Sinovel,Goldwind ,LDK and GCL Poly.This also goes along with China’s strategy of becoming a Clean Technology Leader through home grown World Class Green Technology Champions.

China freezes some renewable energy IPOs: sources – Reuters

Chinese regulators have ordered a freeze on some initial public share offerings in the renewable energy sector, amid fears that overcapacity will weigh on the rapidly growing industry.The government has made no official statement on the freeze, but sources with direct knowledge of the matter said the message had been communicated to executives and investment bankers looking to bring wind or solar power companies to the market.”The government hasn’t said so publicly, but certain sectors including polysilicon and wind are forbidden from hitting the primary IPO market,” said a source familiar with the situation.”They’re holding approval for certain IPOs because of overcapacity concerns.”China Securities Regulatory Committee officials could not be reached for comment. The sources declined to be named because of the sensitivity of the issue.

Clean technology IPOs in China totaled $2.2 billion so far this year against $2.4 billion for the whole of 2009, according to Thomson Reuters data.A freeze on initial public offerings is China’s latest attempt to curtail expansion in an industry that has many small domestic players yet is controlled by just a few.