The China Signal - January 29
SOE China Yangtze moves to fully acquire Luz del Sur, clean energy updates, Huawei's 5G lobbying in Brazil, and pandemic donations
G’day, and welcome to The China Signal! This week, majority shareholder (and Chinese state owned) China Yangtze moves to acquire 100% ownership of Luz del Sur, Peru’s largest electricity company; updates on clean energy projects in Colombia and Argentina; Huawei hires former Brazilian President Michel Temer as the country’s 5G auction approaches; and Chinese firms and Guangdong province make a major medical donation to Amazonas, one of Brazil’s worst affected areas by the pandemic.
Deals and Investments
Peru
“China Yangtze launches a public offer for 13.68% of shares in Luz del Sur” - Increasing China Yangtze’s holdings from 83.7% to almost 100%.
~Paraphrased translation~
The Peruvian Opportunity Company, subsidiary of Yangtze Andes Holding, launched a public offer to acquire the remaining 66.6 million shares of the Peruvian electricity distributor Luz del Sur. This represents close to 13.7% of Luz’s total shares, and would see the ultimate parent company China Yangtze Power increase their stake from 83% to an almost 100% control of Luz del Sur. Yangtze Andes Holding is owned by China Yangtze Power, who in turn is a subsidiary of major state owned Chinese power company China Three Gorges Corporation.
According to the prospectus, the Peruvian Opportunity Company will offer USD $8,5346 per share. The offer is valid for twenty days from January 25, 2021, expiring on February 19. However, the offer can be extended. The complete filings are here.
Peruvian Opportunity Company, filial de Yangtze Andes Holding (Yahc), lanzó una oferta pública para adquirir hasta 66,6 millones de acciones de la distribuidora eléctrica Luz del Sur.
Según información de BNAméricas, las acciones de la compañía representan cerca del 13,7 % de los títulos de Luz, de acuerdo con el prospecto, que destaca que Peruvian Opportunity Company ofrecerá US$8,5346 por cada acción.
Vale mencionar que Yangtze Andes Holding pertenece a China Yangtze Power, que controla el 83,7 % de Luz; el saldo de las acciones está en manos de inversionistas locales y extranjeros.
Some further background:
China Yangtze Power completed the acquisition of their 83% stake in April 2020 for $3.59 billion. The stake was acquired from U.S. firm Sempra Energy as part of their divestment of South American assets. Sempra sold their Chilean business, including their 100% stake in Chilquinta Energia to Chinese state owned enterprise State Grid Corporation for $2.23 billion in June 2020.
Luz del Sur is Peru’s largest power company, distributing power to approximately 1.1 million customers through Lima and other areas of Peru.
The 2020 acquisition followed two earlier acquisitions by parent company China Three Gorges (CTG), after a state visit from Xi Jinping inked an agreement between CTG and Peru’s Ministry for Energy and Mines (below):
During President Xi Jinping’s state visit to Peru in November 2016, the two countries signed the Memorandum of the Mechanism for Development and Collaboration of the Energy Sector, and CTG and the Ministry of Energy and Mines of Peru signed the Agreement on Further Cooperation on Renewable Energy. Subsequently, CTG initiated a series of investments in Peru, including the construction of the 206-MW San Gabán III hydroelectric plant in 2016 and its US$1.41 billion acquisition of the 456-MW Chaglla hydropower plant in 2018.
What is China Yangtze’s ultimate strategy here? Will they take Luz private? I would love to hear your thoughts in the comments below, or through email at mitchhayes1@gmail.com.
Colombia
Colombian president Officially Opens Trina Solar Plant - PR News Wire - January 27, 2021
Trina Solar is a private Chinese firm, and one of the world’s largest solar panel manufacturers.
The second phase of the Los Llanos photovoltaic power plant project developed and managed by Trina Solar in Colombia has been connected to the grid and the start of its commercial operations officially declared.
Phases one, two and three of the Los Llanos project, with total installed capacity of 82 MWp, have been developed by Trina Solar's International System Business Unit (ISBU). Trina Solar (Colombia), a wholly owned subsidiary of Trina Solar, provided EPC management services for this project. The first phase of the 27MWp megawatt project was completed and delivered to the grid in October. The second phase, involving grid connection, installed capacity of 27MWp megawatts and will generate 51 gigawatt-hours of electricity each year, equivalent to the consumption of 23,800 households.
Argentina
*ECNS is a Chinese state media outlet* Chinese-built wind power projects launch commercial operation in Argentina - January 23, 2021
The first and third phases of Chinese-constructed Loma Blanca Wind Power Projects officially launched commercial operation on Friday, injecting energy into the national power grid.
The newly run projects built by China Power Construction have been installed with a total capacity of 100 megawatts, consisting of 32 wind turbines. Up to now, four out of the five projects have been officially put into commercial operation.
The two Loma Blanca projects are estimated to generate about 450 million kilowatt-hours of clean energy, meeting the electricity consumption demand of nearly 100 thousand households.
The completion of all five projects is expected to provide 1.6 billion kilowatt-hours of clean electricity for approximately 360,000 households...
5G
Brazil
Huawei hires former Brazilian president to advise on 5G | ZDNet - January 22, 2021
Huawei has hired a former Brazilian president [Michel Temer] as an advisor as a means to ensure its permanence in the local market as the auction for next-generation 5G wireless networks approaches.
The country's 5G auction was originally set to be held in March 2020, but it was delayed due to the Covid-19 pandemic and should take place in early 2021.
Temer was Dilma Rousseff's vice president and became head of state after Rousseff's impeachment in 2016, remaining in office until 2018. Accused of wrongdoing in several counts including bribery and money laundering, Temer was briefly arrested in 2019 as part of anti-corruption taskforce Operation Car Wash.
While Temer's engagement at Huawei will see the former president providing legal advice on the implementation of 5G in Brazil, his proximity with current incumbent Jair Bolsonaro is particularly valuable to the Chinese supplier.
Interestingly, Temer was proudly trumpeting his skills as a diplomatic broker between China’s Ambassador to Brazil Yang Wangming and Sao Paolo governor João Doria (arch rival to Bolsonaro) this week, reassuring Brazilians that Coronavac inputs from China are being sent “as soon as possible.”
Vaccine Diplomacy
Brazil
*ECNS is a Chinese state media outlet* China offers aid to Brazilian state Amazonas to overcome health crisis - January 25, 2021
The provincial government of Guangdong and Chinese companies such as XCMG, Huawei, BYD, Gree, and the Bank of China, as well as other Chinese enterprises in Brazil and the Brazil-China Sociocultural Institute will donate 4,300 kg of oxygen, 25 oxygen generators, 360,000 masks and other supplies to Amazonas.