Temasek sells Senoko Power for $3.65 billion

Marubeni-led group buys Senoko Power
Temasek sells powergenerator to Lion Power consortium for $3.65 billion
Marissa Chew, Today Online 6 Sep 08;

SENOKO Power, Singapore’s largest power-generating company, has been sold to a : consortium led by Japanese conglomerate Marubeni for close to $4 billion.

The Lion Power consortium is made up of Marubeni Corporation, which has a 30-per-cent shareholding, French energy provider GDF Suez with 30 per cent, Kansai Electric Power and Kyushu Electric Power of Japan with 15 per cent each, and the Japan Bank for International Cooperation, which holds the remaining 10 per cent.

Lion Power will pay Temasek Holdings $3.65 billion in cash and take on Senoko Power’s debt, which was put at $323 million as at March 31, according to a statement from Temasek on Friday. The transaction is expected to be completed by Sept 12.

“We strongly support Senoko Power’s environmental leadership and have committed significant additional investment to construct new, more efficient gas-fired units,” said Mr Chihiro Shikama, chief executive of Marubeni Corporation.

It will be supported in its expansion by partner GDF Suez, which earlier this year agreed to form a joint venture with PowerGas to build and operate Singapore’s first liquefied natural gas terminal onJurong Island.

“Lion Power’s proposal was the most attractive in terms of price and commercial terms among a field of highly reputable investors,” said Temasek’s director for investment, Ms Gwendel Tung.

According to previous media reports, five bidders were shortlisted for Senoko, with final bids due on Wednesday. Aside from the Marubeni group, other companies that had been expected to join the bidding were Keppel Corp, the OneEnergy tie-up between CLP Holdings of Hong Kong and Mitsubishi, Tata Power of India, and YTL Power of Malaysia.

Temasek offered bidders a financing package arranged by the sale advisers, Credit Suisse and Morgan Stanley, to speed up the bidding process. Although Lion Power arranged its own financing, the sale of Senoko Power was wrapped up in a speedy two months, compared with the five months it took for the sale of Tuas Power.

Senoko Power is the second of three power generation companies that Temasek plans to sell by the end of next year.The state investment company sold Tuas Power for $4.2 billion to the China Huaneng Group in March, while PowerSeraya has yet to be put up for sale.

Senoko Power operates Senoko Power Station and Pasir Panjang Gas Turbine Station and provides about 30 per cent of Singapore’s electricity. The two power stations have combined capacity of 3,300 megawatts. For the year ended March 31, Senoko Power had revenue of $2.5 billion and net income of $130 million.

Temasek sells Senoko Power to Marubeni-led group for S$3.65b
Ng Baoying, Channel NewsAsia 5 Sep 08;

SINGAPORE: Singapore investment company Temasek Holdings has sold its Senoko Power generating company to Lion Power Holdings for S$3.65 billion.

Lion Power is a vehicle owned by a consortium led by Japan's Marubeni Corporation. Other members of the consortium are GDF Suez of France, The Kansai Electric Power Company, Kyushu Electric Power Company and Japan Bank for International Cooperation.

Lion Power will assume S$323 million of net debt of Senoko Power as at March 31. The transaction is expected to be completed by September 12.

The deal falls in line with Marubeni's plans to expand overseas and double its power capacity in two years. It has already bought power assets in the Philippines and is building plants in the Middle East and Indonesia.

The bidding process for Senoko began in July and is the second of Temasek's three power generation companies to be sold. The first, Tuas Power, was sold to China's Huaneng Group in March for S$4.2 billion.

With the latest deal, only Power Seraya remains within Temasek's stable. Temasek said last year that it intends to divest all of its wholly-owned power generation companies in Singapore by the end of next year.

Unlike power-hungry countries like China and India, the growth in demand for energy in Singapore is limited. But Senoko Power's sale still attracted a lot of interest.

Temasek said Lion Power's bid was the most attractive in terms of price and commercial terms.

Analysts said Temasek is taking advantage of a lack of privatisation deals in Asia's power industry, having held back divestment plans in recent years.

Still, Senoko Power was sold off about 25 per cent cheaper than Tuas Power on a per mega-watt basis.

Senoko is the largest power generation company in Singapore and provides over 30 per cent of the nation's electricity needs.- CNA/ir

Japanese-led group snags Senoko
Temasek's power company is sold to consortium for $4 billion
Yang Huiwen, Straits Times 6 Sep 08;

SINGAPORE'S largest and oldest power plant was sold to a five-member group of foreign investors yesterday for almost $4 billion.

A Japanese-led consortium emerged as the winning bidder for Senoko Power - owned by Temasek - after a highly competitive two-month bidding and selection process.

The winning group includes French GDF Suez, operator of Europe's largest natural gas network, and Japanese trading house Marubeni Corporation. The companies hold 30 per cent each. Two Japanese firms, Kansai Electric Power and Kyushu Electric Power, hold 15 per cent each while Japan Bank for International Cooperation holds 10 per cent.

It was reported that the group beat India's Tata Power in the final round to win the deal. They had been whittled down from an initial short-list of five groups, which reportedly included Singapore's Keppel Corp, Malaysia's YTL Corp and a joint venture between CLP Holdings and Mitsubishi Corp.

Temasek investments director Gwendel Tung said yesterday that the sale of Senoko Power had received strong investor interest, but the winning group's proposal 'was the most attractive in terms of price and commercial terms'.

She said the contenders were all 'established industry players with strong track records in power investments globally'.

Morgan Stanley and Credit Suisse were the advisers for Temasek.

The plant in the northern part of the island has a capacity of 3,300MW and provides 30 per cent of the nation's electricity needs.

It is the second of three power generating companies to be sold by Temasek, which wants to further liberalise the domestic energy market and promote greater efficiency.

Tuas Power, with a capacity of 2,670MW, was sold for $4.235 billion to China's biggest power producer Huaneng Group in March.

The last to go will be Power Seraya, which has a licensed capacity of 3,100MW. Its sale is expected to be completed by the middle of next year.

Together the three gencos account for more than 80 per cent of Singapore's electricity generating capacity.

Market observers said foreign companies see such power facilities as an opportunity to extend their expertise as plant operators and they see good growth in Singapore. This makes it a good investment in their core competency.

One analyst said there will be synergies generated as consortium member GDF Suez has a stake in Singapore's liquefied natural gas (LNG) terminal, which it will help to build and operate. The terminal is expected to be operational by 2012.

Mr Dirk Beeuwsaert, head of GDF Suez Energy's international unit, told Bloomberg yesterday: 'Singapore represents a significant development potential for GDF Suez and will enable it to strengthen its foothold in South-east Asia.'

Under the deal signed yesterday, the winning group's special purpose vehicle, Lion Power, will pay Temasek $3.65 billion for the plant and assume $323 million of Senoko Power's net debt.

The price works out to a valuation of about 16 times EBITDA earnings, which is more than that paid by China's Huaneng Group for Tuas Power. That had a valuation of about 12 times.

'It is a fair price based on prospects for the business,' said a market source, adding that there are plans to increase capacity by about 800MW.

Marubeni Corporation executive officer Chihiro Shikam said the consortium has committed 'significant additional investment to construct new, more efficient gas-fired units' and looks forward to 'playing a significant role in the provision of reliable, competitively priced electricity in Singapore'.

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