Shanghai Electric : ANNOUNCEMENT ON THE PROPOSED INCREASE IN HOLDING OF H SHARES IN THE COMPANY BY THE CONTROLLING SHAREHOLDER

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

*

SHANGHAI ELECTRIC GROUP COMPANY LIMITED

上海電氣集團股份有限公司

(A joint stock limited company incorporated in the People's Republic of China with limited liability)

(Stock Code: 02727)

ANNOUNCEMENT ON THE PROPOSED INCREASE IN HOLDING OF

H SHARES IN THE COMPANY BY THE CONTROLLING

SHAREHOLDER

This announcement is made by the board of directors (the "Board") of Shanghai Electric Group Company Limited (the "Company") pursuant to Rule 13.09 of the Rules Governing the Listing of Securities (the "Listing Rules") on The Stock Exchange of Hong Kong Limited (the "Hong Kong Stock Exchange") and Inside Information Provisions (as defined in the Listing Rules) under Part XIVA of the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong).

On 27 February 2020, the Company received the Notice on Proposed Increase in Holding of H Shares in Shanghai Electric Group Company Limited by Shanghai Electric (Group) Corporation from Shanghai Electric (Group) Corporation (the "SEC"), the controlling shareholder of the Company, in relation to its proposed increase in holding of H Shares in the Company (the "Proposed Increase in Shareholding").

I. Background of Parties to the Proposed Increase in Shareholding

As of the date of this announcement, SEC directly held 8,662,879,405 A shares of the Company, representing 57.17% of total issued share capital of the Company, and 270,708,000 H shares of the Company, representing 1.79% of total issued share capital of the Company, in aggregate, amounting to 8,933,587,405 shares of the Company, representing 58.96% of total issued share capital of the Company. Meanwhile, SEC, through Shanghai Electric Group Hong Kong Company Limited, its wholly-owned subsidiary, indirectly held 32,934,000 H shares of the Company, representing 0.22% of total issued share capital of the Company. In view of the

- 1 -

above, SEC held 59.18% shares of the Company in aggregate, and therefore is the controlling shareholder of the Company.

II. The Main Content of the Proposed Shareholding Increase

The purpose of the Proposed Increase in Shareholding is to increase confidence of investors, to support sustainable and sound development of the Company and to stabilise the capital market and stock price of the Company, based on the recognition of the Company's value and the confidence in sustainable and stable development of the Company in the future.

The type of underlying shares under the Proposed Increase in Shareholding is tradable H shares of the Company not subject to trading moratorium.

The quantity of underlying shares under Proposed Increase in Shareholding is not less than 10,000,000 H shares in aggregate.

The price range of underlying shares under the Proposed Increase in Shareholding will be determined based on fluctuation of share price of the H shares of the Company and overall trend of capital market.

The method of implementation of the Proposed Increase in Shareholding is including but not limited to centralised bidding on the stock exchange.

The source of fund for the Proposed Increase in Shareholding is SEC's self-owned funds.

The term of the Proposed Increase in Shareholding is within 12 months commencing from 27 February 2020.

The Proposed Increase in Shareholding will be implemented in strict compliance with applicable requirements of laws and regulations including PRC Securities Law, departmental rules and business rules of the Shanghai Stock Exchange and the Hong Kong Stock Exchange. Implementation of the Proposed Increase in Shareholding will not result in change in controlling shareholder and actual controller of the Company.

III. Risk of Uncertainty in Implementation of the Proposed Increase in Shareholding

The Proposed Increase in Shareholding may fall short of expectation due to various factors including the change in the capital market condition.

- 2 -

The Company will pay continuous attention to the Proposed Increase in Shareholding and will perform its obligation of information disclosure in a timely manner.

By order of the Board

Shanghai Electric Group Company Limited

ZHENG Jianhua

Chairman of the Board

Shanghai, the PRC, 27 February 2020

As at the date of this announcement, the executive directors of the Company are Mr. ZHENG Jianhua, Mr. HUANG Ou, Mr. ZHU Zhaokai and Mr. ZHU Bin; the non-executive directors of the Company are Ms. YAO Minfang and Ms. LI An; and the independent non-executive directors of the Company are Dr. CHU Junhao, Dr. XI Juntong and Dr. XU Jianxin.

* For identification purpose only

- 3 -