China’s Reactor Restart

THE WORLD’S BIGGEST NUCLEAR POWER CONSTRUCTION PROGRAM IS MOVING AGAIN, AND INVESTORS MAY BE OFFERED A PIECE.

GUO AIBING

MAP BY STUDIO TONNE

AFTER JAPAN’S Fukushima Dai-Ichi power plant was destroyed in March 2011, China put new nuclear projects on hold. That pause now appears to be ending.

China’s cabinet approved in principle a nuclear safety plan for the next several years, according to a May 31 announcement on the government’s website. And in early June, China National Nuclear Power Co. got approval from the environment ministry for an initial share sale to help fund construction and operation of five reactors. The state-owned company expects the total cost of the generators to be 174 billion yuan ($27 billion), and the IPO may be huge. Australian investment bank Macquarie Group Ltd. estimates that the company might raise 50 billion yuan with its share sale, for which no date has been set.

An IPO by China National Nuclear, which has roots in the government’s development of nuclear weapons, would for the first time provide investors with an opportunity to own stock in a Chinese nuclear plant owner and operator. Shares of nuclear equipment companies already trade in Shanghai and Hong Kong.

“Unless China National Nuclear prices its offering extremely high, investors will like it,” says Patrick Dai, a Macquarie analyst in Hong Kong. He predicts success even though the pace of Chinese IPOs has slowed this year. “China National Nuclear will give the market something it has never seen,” Dai says.

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