www.CB.com.cn | Exploring New Ways to Unlock Value of Energy Assets: China's First Inter-Institutional Thermal Power REIT Issued on the Shanghai Stock Exchange
Reporters: Sun Ruxiang, Xia Xin, Beijing
Recently, the "Guojin Asset Management – Xinjiang Guosen Hold-Type Real Estate Asset-Backed Special Plan" was successfully established on the Shanghai Stock Exchange (SSE), with an issuance size of RMB 5.46 billion.
This project represents the nation's first hold-type real estate ABS in the thermal power sector (hereinafter referred to as "inter-institutional REITs"), marking a key breakthrough in the securitization of assets in the energy infrastructure field. By completely removing reliance on the issuer's credit and relying on the stable cash flows generated by the assets themselves to provide continuous returns to investors, the project offers a brand-new financing model for the high-quality development of the industry.
The project adopts a market-oriented inquiry-based issuance mechanism, fully leveraging the diversified investor base of the exchange market to support efficient and reasonable pricing. The issuer conducts inquiries with various institutional investors by clearly defining asset valuations and inquiry price ranges. This approach differs from the traditional method in the real estate transaction sector, which mainly relies on identifying cornerstone investors to set the price, followed by participation from other investors. By fostering more comprehensive market competition and promoting an effective balance between investment and financing, the mechanism has attracted active participation from a diversified range of institutional investors, including insurance companies, trust institutions, private equity funds, and industrial investors.
At the same time, the project has innovatively implemented a joint sales and market-making mechanism. CICC, acting as the sales institution, participates in the project issuance and continues to provide sales support in the secondary market, thereby enhancing product liquidity. Professional market makers are introduced to provide services such as bilateral quoting and inquiry-based matching, effectively maintaining stable market operations while creating an efficient and transparent trading environment for investors. The pricing references provided by market makers, based on their professional research capabilities, will further promote the market's price discovery function and help achieve reasonable asset valuation. This series of institutional arrangements is expected to significantly improve product liquidity and offer investors a higher-quality trading experience.
The successful issuance of this product opens a new channel for the transformation and upgrading of capital-intensive energy companies. By using the recovered funds to support the transition to clean energy and technological innovation, it can create a virtuous "investment–construction–asset revitalization–reinvestment" cycle, effectively promoting green and low-carbon development in the energy sector.
Inter-institutional REITs are positioned as equity-type listed products and represent a crucial component in building a multi-tiered REITs market. They serve as an important innovative tool for "unlocking existing assets and expanding effective investment". Since the launch of the first inter-institutional REITs in 2023, the SSE has been committed to developing the hold-type real estate ABS market, pioneering the continuous implementation of benchmark projects across commercial properties, infrastructure, rental housing, energy infrastructure, warehousing and logistics, data centers, and follow-on fundraising. The SSE has promoted the adoption of innovative mechanisms including incentive and restraint systems, information disclosure, secondary market trading, and platform-based follow-on fundraising, while also providing product examples and business Q&A guidance to facilitate coordinated development with public REITs, leveraging complementary advantages. By the end of November, 51 projects had been submitted for approval, with a total proposed scale of approximately RMB 115 billion, of which 20 projects had been successfully issued, with the issueing scale of RMB 45.6 billion.
(Edited by: Luo Ji; Reviewed by: Xia Xin; Proofread by: Yan Jingning)