Temasek kicks off sale of its power generation
companies
By Ng Baoying, Channel NewsAsia | Posted: 18 October 2007 1858
hrs
SINGAPORE: has Temasek Holdings kicked off the sale of its three
power generation companies or gencos.
The first to be sold will be Tuas Power, which had a 26.1 percent
share of Singapore's electricity market last year.
Temasek did not name an asking price, but market watchers have
estimated that Tuas Power could fetch up to S$3 billion.
Tuas Power is first on the auction block because it has seen the
most investor interest. It has a book value of S$1 billion, but the
bidding is expected to be fierce.
Wong Kim Yin, Temasek Holdings' managing director of investment,
said: "Many of them are regional players. Many of them are actually
power sector players. There are also folks from the financial
community. There are people who are strategic players as
well.
"So, without naming names, we are quite sure that based on the
feedback we have so far, we see sufficient interest that can allow
us to get the outcome that we'd like to see."
The sale of the three gencos is in line with efforts to diversify
and stabilise Singapore's energy sources. After several delays, the
government earlier this year gave a time frame of 12-18 months for
the divestment.
Several Singapore names - including SembCorp Industries - are said
to be interested in buying over the gencos. Reports also named
global players such as General Electric, Babcock & Brown, and
Tokyo Electric Power as those planning to enter the fray.
Daphne Roth from the ABN AMRO Bank said: "Market sentiment is still
very bullish on any infrastructure deal because there's a shortage
of brownfield, greenfield infrastructure around in Asia.
"There is a glut there, but most of the people look at Singapore
and the scale of our economic growth at present, which is very
good. Also, the stability of our economy and the fact that these
utilities normally generate very good cash flow - that's why they
like it."
Temasek expects to receive indicative offers for Tuas by the end of
the year, and binding offers by March next year. It has not set any
reserve price.
Rather, Temasek will assess bidders from an all-rounded
perspective, which includes factors like having a clean sale with
minimal liabilities.
It will also look at how the sale of one will affect the sales of
the other gencos. Temasek plans to sell each power company to a
different buyer.
Successful bidders can have the option of expanding their
plant.
Temasek's Mr Wong said: "Each of these businesses has a generation
licence generated by the regulator. So to increase the size of the
plant, they would have to get approval from the regulator.
"Having said all that, each of these businesses is very well
positioned. Singapore is only that big. There's only so much of
land. Each one of these power plants has the expansion capabilities
built into their sites, built into their businesses.
"So, from that perspective they are very well positioned to do it
and they would need regulatory approval to expand their
business."
Temasek plans to sell the remaining two gencos - Power Seraya and
Power Senoko - by the first half of 2009. - CNA/ir
so how does the peasant benefit from this? interest to the
CPF?
