Dec. 19 (Bloomberg) -- Huaneng Power International Inc., China's second-largest power producer by market value, paid 1.52 billion yuan ($206 million) for a 9.08 percent stake in Shenzhen Energy Investment Co. to expand in southern China.

Huaneng bought 200 million new shares at 7.60 yuan each through a private offer, the company said in a statement to Shanghai's stock exchange today. The price was an 8 percent discount to Shenzhen Energy's closing shares of 8.3 yuan on Dec. 5 last year, when Huaneng first announced the acquisition plan.

The stake will allow Huaneng to benefit from surging electricity demand in Guangdong province, the country's biggest manufacturing hub. China's power consumption will rise faster than expected in the next three to five years because of the nation's economic growth, according to a Dec. 6 Credit Suisse Group report.

Shenzhen Energy's 2007 net income will probably more than double from last year's 800 million yuan after including earnings generated at power plants bought from its parent, the Shenzhen-based utility said in a statement to the city's stock exchange today.

Huaneng's Hong Kong-listedshares rose 1.7 percent to HK$7.83 at the close. The company's Shanghai-traded shares gained 2.8 percent to 14 yuan. Shenzhen Energy rose 0.3 percent to 22.88 yuan.

Huaneng bought a 25 percent stake in Shenzhen Energy Group, Shenzhen Energy's parent, for 2.39 billion yuan in 2003.

China's economy expanded 11.5 percent in the third quarter, the fastest pace among major nations.

To contact the reporter on this story: Jiang Jianguo in Shanghai at jjiang@bloomberg.net; Winnie Zhu in Shanghai at wzhu4@bloomberg.net

Last Updated: December 19, 2007 03:44 EST