State Power Group and Shenhua Group merged to form **Energy Investment Group

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On August 28, 2017, the official website of the State-owned Assets Supervision and Administration Commission of the State Council announced that, with the approval of the State Council, China Guodian Group Corporation and Shenhua Group Co., Ltd. were merged to form **Energy Investment Group Co., Ltd. By the end of December 2016, the total assets of State Power Investment Corporation had reached 803.1 billion yuan. According to the latest data released by Shenhua, as of the end of April 2017, the total assets of Shenhua Group amounted to 1,014.3 billion yuan, exceeding 1 trillion yuan. This figure represented an increase of 1,003.2 billion yuan compared to the time when Shenhua Group was established in 1995, representing a growth rate of 91 times ； In 2016, the business revenue was 247.9 billion yuan, and the profit amounted to 36.1 billion yuan, representing increases of 354 times and 516 times respectively compared to 1995. The total assets of the two companies exceed 1.8 trillion yuan. Rumors about the restructuring of coal-fired power plants have been circulating since last year. Li Jin, a senior researcher at the China Enterprise Research Institute, previously told The Paper that this year, state-owned enterprises are likely to undergo large-scale mergers and restructurings, with major restructuring in the power sector being imperative. Because, compared to other industries, the power sector has a relatively large number of central state-owned enterprises; mergers and reorganizations can effectively reduce duplicate construction and unnecessary investments, as well as cut down on competition among companies in the same industry. As early as June 4, China Shenhua announced that it had received notification on June 2 from the company’s controlling shareholder, Shenhua Group, stating that the latter intended to undertake major actions related to the company; as a result, the A-share stocks were suspended from trading starting June 5. Meanwhile, Guodian Power, a subsidiary of State Power Investment Corporation, along with Guodian Science & Environment (01296.HK) and Longyuan Power (00916.HK), also issued similar announcements. On the evening of July 3, both companies issued announcements stating that they would continue to be suspended from trading. In those announcements, it was said that the potential partners for the restructuring between Shenhua Group and Guodian Group were from the energy sector, which further confirmed speculation about the restructuring of coal-fired power companies. According to media reports, on August 2, at the Low-Carbon Emission Forum held as part of the 11th China International New Energy Summit, Guan Weizhu, head of the Safety Production Department of State Power Investment Corporation, stated publicly that a plan for the merger of State Power Investment Corporation and Shenhua Group had been submitted to the State Council, with the provisional name for the new group being **Energy Investment Group. On the evening of August 4, China Shenhua and Guodian Power issued another announcement regarding the continuation of the suspension. China Shenhua stated that the counterparty in this transaction is expected to be a large state-owned enterprise in the energy sector, with the State-owned Assets Supervision and Administration Commission of the State Council as its actual controller ； The proposed main business involves power production and operation, with the specific scope yet to be finalized. Guodian Power stated that the counterparty in this major asset restructuring is expected to be a large state-owned enterprise in the energy sector, with the State-owned Assets Supervision and Administration Commission of the State Council as its actual controller. The main business of the target assets to be restructured is power generation and operation, and the scope of these target assets has not yet been finalized. The transaction plan is still under discussion and evaluation; the transaction methods may include asset restructuring approaches such as issuing shares, using assets, or conducting cash transactions. More and more details are becoming clear regarding the merger of the two companies.