Huaneng, Invesco Form Venture to Buy Energy Projects

By Lee Spears and Wang Ying

Sept. 16 (Bloomberg) -- China Huaneng Group, the nation's biggest electricity producer, agreed to form a venture with Invesco Ltd. to identify private-equity investment opportunities in power generation.

The utility's Huaneng Capital Services unit will own 50 percent of the venture with Invesco WLR Ltd., a subsidiary of the Atlanta-based fund manager, the two companies said today at a Beijing press briefing.

Huaneng and Invesco aim to capitalize on one of the world's fastest-growing markets for carbon trading and renewable-energy projects, with China poised to surpass the U.S. as the biggest emitter of climate-altering gases. The fastest-expanding major economy faces such acute power shortages that electricity-sapping industries including aluminum smelters have had to halt production.

``This joint venture will seek to identify tremendous investment opportunities in China while helping to meet the nation's growing demand for energy,'' Invesco Chief Executive Officer Martin Flanagan said at the briefing.

China has been falling behind on the government's own schedule to cut emissions by 20 percent between 2006 and 2010. Chinese Premier Wen Jiabao in July raised a tax to make large- engine vehicles cost more while ordering oil-fired power plants to shut. People were urged to dress in cooler clothing in summer and take public transport, while street lights will switch to energy-efficient bulbs, the government said.

Huaneng's venture with Invesco, with 50 million yuan ($7.3 million) in registered capital, will serve as an adviser for investments, raising funds in China for projects in the country as needed, said Wilbur Ross, chairman of WL Ross & Co.

Initial projects will include wind power, and the company will also aim to invest in clean-coal technology and biomass, said Shen Zhongming, the joint venture's chief executive.

To contact the reporter on this story: Lee Spears in Beijing at lspears2@bloomberg.net