Xinyi Energy Holdings Limited (Xinyi Energy) and its parent Xinyi Solar Holdings Limited (Xinyi Solar) have jointly disclosed a proposal to spin off two mainland solar-farm subsidiaries into a Shenzhen-listed real-estate investment trust, the XYE New Energy Fund.
Transaction structure • Xinyi Energy will dispose of 100% equity in Wuhu Xinyi Renewable Energy Limited and Lu’an Xinyi Renewable Energy Limited (collectively, the “Target Entities”). • The Target Entities own the 100 MW Sanshan Project in Wuhu City and the 150 MW Xiaonanjing Project in Lu’an City, both operating under China’s feed-in-tariff regime. • Shanghai Guotai Haitong Securities Asset Management will act as both Fund Manager and ABS Manager, establishing the XYE New Energy Fund as a closed-end infrastructure securities investment fund. • Post-spin-off, the fund will acquire an asset-backed securities (ABS) vehicle, which in turn will hold all equity of the Target Entities; the Fund will then list its units on the Shenzhen Stock Exchange (SZSE).
Fundraising and ownership • The Draft PRC Offering and Listing Documents indicate a target fundraising size of approximately RMB1.62 billion via a public offering of fund units in China. • Xinyi Energy, through wholly owned subsidiaries, intends to subscribe for 40% of the units as a strategic investor; the remaining 60% will be offered to independent third-party and public investors. • Disposal proceeds will be settled in cash from the fund’s IPO receipts. Exact consideration will be finalised closer to listing.
Financial profile of Target Entities (PRC GAAP) • Revenue: RMB238.75 million in 2024; RMB242.28 million in 2025; RMB40.42 million for the three months to 31 March 2026. • Net profit: RMB102.35 million in 2024; RMB110.10 million in 2025; RMB8.44 million for the three months to 31 March 2026. • Combined equity as at 31 March 2026: RMB1.23 billion.
Post-listing framework • The Fund will have a 14-year term, with distributions at least annually and set at not less than 90% of annual distributable income. • Xinyi Energy’s wholly owned subsidiary will continue as Service Manager, earning base operations and property-management fees for both solar projects, with fees rising 2% annually from 2027 and an additional performance-linked component. • Following completion, the Target Entities will cease to be Xinyi Energy subsidiaries; the fund will be managed independently by the Fund Manager.
Regulatory and transaction classification • Under Hong Kong Listing Rules, the disposal qualifies as a major transaction for Xinyi Energy (highest percentage ratio ≥25% but <75%), requiring shareholder approval, while the unit subscription is a disclosable transaction (5%–25% ratios). • For Xinyi Solar, both the disposal and the subscription are disclosable transactions (ratios >5% but <25%) and do not need shareholder approval. • Xinyi Energy and Xinyi Solar will file a Practice Note 15 application with the Hong Kong Stock Exchange. The spin-off and SZSE listing remain subject to approvals from HKEX, the China Securities Regulatory Commission, and SZSE, as well as prevailing PRC market conditions.
Strategic rationale The spin-off is designed to accelerate value realisation of the feed-in-tariff solar assets, generate recurring fee income from post-listing operational services, and provide Xinyi Energy with liquidity for new investments and general working capital. Regular distributions from the fund are expected to support the group’s cash flow over its 14-year life.
Cautionary note Implementation of the spin-off and PRC listing is not assured pending regulatory clearances and market conditions. Investors are advised to exercise caution when dealing in the securities of Xinyi Energy and Xinyi Solar.