CLP Holdings Ltd., Hong Kong biggest electricity supplier, fell the most in more than four years after selling HK$7.6 billion ($981 million) of shares at a discount to finance power projects.
The stock declined as much as 5.1 percent to HK$63.80, the most since Dec. 2, 2008, and traded at HK$65.15 as of 11:17 a.m. in Hong Kong. CLP offered as many as 120.3 million shares at HK$63.25 apiece, 5.9 percent less than its closing share price of HK$67.20 yesterday.
The share sale comes as CLP’s Indian and Australian businesses have stalled in the past year, and tariff increases in Hong Kong haven’t kept pace with higher fuel costs, according to Sanford C. Bernstein & Co.
“Nothing is getting better in markets such as Hong Kong, Australia and India,” said Michael Parker, a senior analyst at Sanford C. Bernstein & Co. in Hong Kong. “Now they may raise $1 billion through equity sales, but they are going to face the same problems going forward.”
The stock has declined 1.5 percent this year, compared with a 22 percent gain for the Hang Seng Index. The benchmark index climbed for a third day yesterday, extending its highest close since August 2011, on speculation the U.S. Federal Reserve will announce another round of quantitative easing.
The proceeds will be used for “investment in the Hong Kong electricity business, such as in infrastructure related to gas supply from the mainland, and in additional generating capacity in those markets where the group is already present,” CLP said in the statement.
JPMorgan Chase & Co., UBS AG and Goldman Sachs Group Inc. are arranging the sale, according to the statement.
CLP, which estimated 2012 capital spending at HK$7.88 billion, plans to raise net charges for electricity in Hong Kong by 5.9 percent in 2013 because of higher fuel costs, the company said Dec. 11.