The Singapore-listed Sembcorp Industries, backed by Temasek, has agreed to purchase Australia’s fourth-largest energy company, Alinta Energy, for A$6.5bn (€3.7bn) with commitments to roll out renewable energy across the country.
Sembcorp announced that it has agreed to pay in cash for all Alinta shares held by the Hong Kong-based Chow Tai Fook Enterprises and Pioneer Sail Singapore. The details of the deal follow Sembcorp’s confirmation of media speculation about the takeover earlier this week.
Sembcorp said: “The proposed acquisition advances Sembcorp’s strategic plan to grow its renewables portfolio and delivers immediate earnings accretion. Alinta owns and operates a fleet of highly reliable and well-maintained generation assets, with best-in-class generation and energy risk management.
“Alinta’s proven track record in delivering utility-scale battery, gas-fired generation, solar and wind generation provides Sembcorp with a highly scalable platform for expansion in an attractive developed market and enables Sembcorp to grow its renewables ambitions, while enhancing portfolio diversification.”
Wong Kim Yin, group CEO at Sembcorp, said: “This acquisition gives us a strong position in a key developed market and provides a scalable platform for Sembcorp to grow renewables and low-carbon solutions. While we remain focused on driving the energy transition in the markets we operate in, we recognise the importance of Alinta’s existing power-generation assets toward energy security and affordability.”
Wong was referring primarily to Loy Yang B, a coal-fired power generator in Victoria which is part of Alinta’s portfolio that supplies approximately 20% of the state’s energy demand with flexible and low-cost baseload electricity along with essential system services required to support the integration of renewables into the grid.
He said: “We will work closely with the government, communities, and the experienced management team at Alinta, to ensure a balanced energy transition that meets national and stakeholder needs.”
Jeff Dimery, managing director and CEO, Alinta, said: “Sembcorp is an ideal long-term investor in Alinta. It has a proven track record in the energy sector and the capacity and capability to support Alinta as we pursue new opportunities and invest in our development pipeline.
“This acquisition will create value by bringing together our expertise and resources to deliver a shared commitment to a responsible energy transition.”
The Singapore company has a 28.3GW portfolio of energy-generation assets comprising renewables storage, and gas assets in 11 countries in Asia-Pacific, the Middle East and Europe. It said the earning-accretive transaction added meaningful scale and diversification to Sembcorp’s portfolio of renewables, energy storage and gas assets.
“Australia is a AAA-rated OECD country with national climate targets and supportive energy-transition policies, presenting attractive long-term investment opportunities for Sembcorp,” said the company.
“This transaction marks Sembcorp’s entry into a country with a legislated 2050 net-zero goal, supported by federal government policies including a target of 82% renewables by 2030. These ambitions align closely with Sembcorp’s energy transition objectives,” it added.
Alinta supplies electricity and gas to almost 1.1 million customers nationwide. It also operates a diversified portfolio of 3.4GW of installed and contracted generation capacity across coal, gas, wind, and solar.
Among the integrated energy players in Australia, Alinta provides access to a substantial potential development pipeline of 10.4GW comprising renewables and firming systems. This positions Alinta well to ride market tailwinds in Australia’s energy sector and provides new opportunities for Sembcorp to drive the energy transition, according to the investor.
Subject to the necessary regulatory and shareholder approval, the transaction is expected to be finalised in the first half of the new year.
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