What next for China Huaneng after Tuas?
China Huaneng Group will buy Singapore's Tuas Power for S$4.24 billion ($3.1 billion) in China's second-biggest overseas acquisition this year.
The Beijing-based company has signed an agreement to buy Tuas Power from Temasek Holdings, China Huaneng, the nation's biggest power producer, said on its Web site. The transaction is expected to be completed by March 24, Singapore's state investment company said in a separate statement
Chinese companies are stepping up overseas acquisitions to supply materials and resources to sustain economic growth at more than 10 percent a year. Aluminum of China, the nation's largest producer of the metal, bought a 9 percent stake in Rio Tinto Group last month.
The purchase “represents a major step for China Huaneng in its goal to diversify its assets across geographies and technologies,” Vice President Huang Long said in the statement.
Tuas Power, the first of three utilities Temasek is selling, was set up in 1995 and has 2,670 megawatts of capacity built at a cost of S$2 billion. Its power station at the western end of the city state comprises four blocks of natural gas-fired combined cycle plants and two units of steam plants.
“The move is a natural extension of the Chinese power producer's core competencies,” Donovan Huang, a Nomura Securities's analyst, said by phone in Hong Kong. “China Huaneng has sound management and has some gas-fired management experience.”
For the year ended March 2007, Tuas Power had revenue of S$2.27 billion, up 31 percent from a year earlier, its financial report showed. Net income for the year ended March 31 was S$177 million, 70 percent more than a year earlier. As at December 31, Tuas Power's net debt stood at S$71 million.
China Huaneng's proposal, through its subsidiary SinoSing Power, was the “most attractive,” Wong Kim Yin, Temasek's managing director for investments, said in the statement. “It emerged as the winner based on clear considerations of price and acceptable commercial terms,” the statement said, without elaborating on the other bidders.
Temasek received six bids for Tuas Power, the Business Times reported in December, citing people it didn't identify. Marubeni, Keppel and SembCorp Industries plan to bid for the three utilities, three bankers with knowledge of the deal had said in July.
China Huaneng's acquisition comes as China, the world's biggest electricity consumer after the US, battles its worst power shortage in more than two years. Earlier this year, the heaviest snowstorms in 50 years hit the central and southern regions, knocking out power grids and cutting off supplies. The government ordered state companies to halt coal exports and boost fuel imports to meet shortages.
Credit Suisse Group and Morgan Stanley are advising Temasek on the sale. Lehman Brothers Holdings is advising China Huaneng.
Temasek in June last year revived plans to sell Singapore's three biggest utilities after a six-year delay, to tap rising demand for power assets. The three generators account for 90 percent of the island's power capacity.
The sale of Power Senoko and Power Seraya will be next after the divestment of Tuas Power, Temasek said last year.
What other utilities will the Chinese look for in order to remedy its energy shortages?
The Beijing-based company has signed an agreement to buy Tuas Power from Temasek Holdings, China Huaneng, the nation's biggest power producer, said on its Web site. The transaction is expected to be completed by March 24, Singapore's state investment company said in a separate statement
Chinese companies are stepping up overseas acquisitions to supply materials and resources to sustain economic growth at more than 10 percent a year. Aluminum of China, the nation's largest producer of the metal, bought a 9 percent stake in Rio Tinto Group last month.
The purchase “represents a major step for China Huaneng in its goal to diversify its assets across geographies and technologies,” Vice President Huang Long said in the statement.
Tuas Power, the first of three utilities Temasek is selling, was set up in 1995 and has 2,670 megawatts of capacity built at a cost of S$2 billion. Its power station at the western end of the city state comprises four blocks of natural gas-fired combined cycle plants and two units of steam plants.
“The move is a natural extension of the Chinese power producer's core competencies,” Donovan Huang, a Nomura Securities's analyst, said by phone in Hong Kong. “China Huaneng has sound management and has some gas-fired management experience.”
For the year ended March 2007, Tuas Power had revenue of S$2.27 billion, up 31 percent from a year earlier, its financial report showed. Net income for the year ended March 31 was S$177 million, 70 percent more than a year earlier. As at December 31, Tuas Power's net debt stood at S$71 million.
China Huaneng's proposal, through its subsidiary SinoSing Power, was the “most attractive,” Wong Kim Yin, Temasek's managing director for investments, said in the statement. “It emerged as the winner based on clear considerations of price and acceptable commercial terms,” the statement said, without elaborating on the other bidders.
Temasek received six bids for Tuas Power, the Business Times reported in December, citing people it didn't identify. Marubeni, Keppel and SembCorp Industries plan to bid for the three utilities, three bankers with knowledge of the deal had said in July.
China Huaneng's acquisition comes as China, the world's biggest electricity consumer after the US, battles its worst power shortage in more than two years. Earlier this year, the heaviest snowstorms in 50 years hit the central and southern regions, knocking out power grids and cutting off supplies. The government ordered state companies to halt coal exports and boost fuel imports to meet shortages.
Credit Suisse Group and Morgan Stanley are advising Temasek on the sale. Lehman Brothers Holdings is advising China Huaneng.
Temasek in June last year revived plans to sell Singapore's three biggest utilities after a six-year delay, to tap rising demand for power assets. The three generators account for 90 percent of the island's power capacity.
The sale of Power Senoko and Power Seraya will be next after the divestment of Tuas Power, Temasek said last year.
What other utilities will the Chinese look for in order to remedy its energy shortages?
posted by Charltonmedia.com @ 8:29 PM
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