The Temasek-backed Sembcorp Industries (Sembcorp) has agreed to buy a 30% interest in Senoko Energy, Singapore’s biggest energy company, from the Paris-based Engie Group.

The Singapore company’s wholly owned subsidiary, Sembcorp Utilities, will acquire the stake in Senoko Energy from Engie Global Developments through Engie’s subsidiary, TWMB Holdings.

Senoko Energy is a major supplier of electricity in Singapore where it plays a critical role in meeting energy demand from key industries. The investment would be complementary to Sembcorp’s current portfolio of energy assets, enhancing its capability to support Singapore’s energy transition while providing for energy security and resilience for Singapore, the company said in a stock exchange filing.

The transaction is subject to various conditions including specific regulatory approvals from the Energy Market Authority of Singapore and the pre-emption rights of the other shareholders of Senoko Energy.

“In view of the foregoing, the salient terms of the proposed acquisition will be announced on its completion, expected in the fourth quarter of 2024. Material developments will also be announced in due course,” Sembcorp said.

While the value of the stake has not been disclosed, Bloomberg reported early this year that Engie and Japan’s Marubeni, which each hold a 30% stake in Senoko, were looking to divest their holdings and that they were “valuing their stake at US$3bn”.

Sembcorp said the acquisition would be funded through its internal cash resources and/or external borrowings. It added that the deal was in the “ordinary course of business” and, if completed, was expected to be accretive to the earnings of Sembcorp and would not have a material impact on the net tangible assets per share of Sembcorp for the financial year ending December 31, 2024

Engie was part of a consortium known as Lion Power, led by Marubeni, which, in 2008, bought Seneko Power from Temasek Holdings for S$3.65bn in cash and assumed its debt totalling S$323m.

Other Lion Power shareholders include Kansai Electric Power, Kyushu Electric Power and Japan Bank for International Cooperation which own 40% between them. Senoko was the second of Temasek three power generation companies to be sold under its plan to divest all of its wholly-owned power generation companies in Singapore by end of 2009.

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