* Indicated 13 pct higher pre-debut
* Sold 2.1 bln shares, 30 pct of enlarged share capital
* Joint 8th-biggest IPO in world so far this year
(Adds details)
By Kennix Chim and Leonora Walet
HONG KONG, Dec 10 (Reuters) - Shares in China Longyuan Power Group Corp Ltd <0916.HK>, the fifth-largest wind power generator in the world, were indicated 13 percent higher ahead of their Hong Kong debut on Thursday following a $2.2 billion IPO that drew keen interest.
Investors are hungry to buy into renewable energy stocks in order to tap the fast growing sector, but a glut of IPOs and market volatility following Dubai's credit problems have taken some of the steam out of the market.
Longyuan is a major subsidiary of China Guodian Corporation, one of China's five largest power generation groups. The IPO had attracted sovereign wealth fund China Investment Corp (CIC), U.S. billionaire investor Wilbur Ross and China Life Insurance Group.
Longyuan shares traded at HK$9.20 at 0211 GMT, compared with their IPO price of HK$8.16, which was at the top of an indicated range. The benchmark Hang Seng Index <.HSI> rose 0.9 percent.
In grey market trade on Wednesday, Longyuan's stock ended 12 percent higher, according to Phillip Securities.
"Investors can grab a profit when Longyuan shares have about a 10 percent gain, given its high valuation and market volatility," said Jackson Wong, investment manager at Tanrich Securities.
The price rise was in line with market expectations even though the United Nations this week blocked Longyuan's bid for carbon financing for five wind projects in China.
That rejection would represent less than 1 percent of the company's net income this year, Longyuan said, adding that the decision won't have a "material adverse" effect on its business.
Under Kyoto's Clean Development Mechanism (CDM), companies can invest in clean energy projects in emerging countries like China and receive carbon offsets which can be sold for profit.
CDM is approved on the basis of "additionality", ensuring that carbon financing only goes to projects that would otherwise be unprofitable.
Longyuan did not say if it has other projects pending CDM registration. There are over 200 Chinese wind farms in the CDM pipeline currently.
Longyuan, Asia's largest wind power generator, sold 2.1 billion shares, or 30 percent of its enlarged share capital.
The Hong Kong retail tranche was about 235 times subscribed. The popularity triggered the clawback option, raising the retail portion to 20 percent of the total offering from 5 percent.
Longyuan's offer price represents a multiple of 28.9 times forecast 2010 earnings, in line with Spain's Iberdrola Renovables' <IBR.MC> 27.2 times and EDP Renovaveis' <EDPR.LS> 30 times, according UBS research.
The underwriters on average estimated Longyuan's 2009 earnings would more than double to 890 million yuan ($130 million), and double again to 1.78 billion yuan in 2010.
Morgan Stanley <MS.N> and UBS <UBSN.VX> were handling Longyuan's deal.
For FACTBOX on world top-10 IPOs this year, click [ID:nSP534106]
(Editing by Ian Geoghegan) (US$1=HK$7.75=6.83 yuan)
((kennix.chim@thomsonreuters.com; +852 2843 6313; Reuters Messaging: kennix.chim.reuters.com@reuters.net)) ((If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com)
Keywords: LONGYUAN/
