(Yicai Global) Jan. 7 -- Shanghai Electric Group's stock price rose today after the electric equipment manufacturer said it plans to seeks an initial public offering on China's Nasdaq-style Star Market for a unit that is the country's biggest maker of offshore wind power generators.

Shares of Shanghai Electric [SHA:601727] gained 1.8 percent to close at CNY5.15 (74 US cents) each, after surging as much as 4.2 percent earlier in the day. The benchmark Shanghai Composite Index ended 0.7 percent higher.

Shanghai Electric aims to list Shanghai Electric Wind Power Group on the Star Market, the science and technology innovation board of the Shanghai Stock Exchange, as the unit seeks to invest more in technologies and expand business, the parent company said in a statement yesterday. The subsidiary has a more than 40 percent share of China's market for wind turbines, it added.

Shanghai Electric Wind Power had assets worth about CNY16.6 billion (USD2.4 billion) as of Sept. 30. Revenues will fluctuate due to policy changes, the unit said, adding that it had operating income of CNY6.1 billion and a loss of CNY52.3 million (USD7.53 million) in 2018. Its parent's wind power business made a net profit of CNY100 million in the first three quarters of last year on CNY4.9 billion of revenue.

Shanghai Electric said that the initial public offering can improve its financing options, effectively cutting capital costs, while offering financial security to Shanghai Electric Wind Power. The unit will also be able to tap the capital market for mergers and acquisitions and other capital operations to further expand the scope of its business, enrich its product portfolio and achieve fast growth.

The unit remains quite independent in its business scope and operating mode from the parent company's other units, Shanghai Electric said. The spin-off will not have a substantial impact on the daily management and operations of its other businesses.

Shanghai Electric also noted that although the spin-off will dilute its equity holding in the unit it will still have a controlling stake. Its financial status and earnings will remain part of the parent firm's consolidated statement.

Editor: Peter Thomas