Sembcorp in Advanced Talks to Buy Australia’s Alinta Energy
(Bloomberg) -- Sembcorp Industries Ltd. is in advanced discussions to buy Australian utility Alinta Energy Pty, according to a person with knowledge of the matter, the latest step by the Singaporean company to expand its footprint abroad.
Alinta is owned by Hong Kong billionaire Henry Cheng’s Chow Tai Fook Enterprises Ltd., which has been considering its options for the company, and hired advisers in January. The Australian firm is worth at least A$3.4 billion ($2.3 billion) including debt, based on the earnings to valuation ratio of competitor AGL Energy Ltd. and Alinta’s projected growth rate.
No definitive transaction has been entered into yet, Sembcorp, backed by Singapore’s Temasek Holdings Pte., said in a statement earlier on Monday. The Singaporean firm “is currently considering potential acquisition opportunities which include Alinta Energy,” it said in the statement, following reports in the Australian Financial Review and The Australian newspapers over the weekend.
Chow Tai Fook bought Alinta Energy, which has more than 1 million customers in Australia and New Zealand, for more than A$4 billion in 2017. It sold the utility’s assets in Western Australia’s Pilbara region to APA Group for A$1.7 billion including debt in 2023. Cheng has been seeking to offload assets, including properties in the family’s luxury Rosewood Hotel Group, to overcome liquidity challenges at his New World Development Co. real estate firm.
Sembcorp, meanwhile, has been looking to expand in the Asia-Pacific region. It bought solar assets in India from ReNew Energy Global in October and was also said to be in talks to buy a minority stake in the gas-fired business of Thai energy company B.Grimm Power Pcl.
Shares in Sembcorp fell as much as 2.2% on Monday. Sembcorp and Alinta didn’t respond to requests to clarify the current status of discussions.
Sembcorp is being advised by Goldman Sachs Group Inc. and DBS Group Holdings Ltd., while Chow Tai Fook is being advised by RBC Capital Markets and UBS Group AG, according to the AFR. The takeover would need approval from Australia’s Foreign Investment Review Board.
Alinta’s biggest generating asset is the 1,200-megawatt Loy Yang B brown coal fired power plant in Victoria, which supplies about a fifth of the state’s power, according to the company. The utility has been seeking to expand its renewables footprint.
(Updates with status of potential deal from first paragraph.)
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