In a move that will help pare its coal-based power capacity, Sembcorp Industries will sell its two India-based power plants to Oman’s Tanweer Infrastructure Pte for Rs 11,700 crore. The two super critical power plants, with a combined capacity of 2.6 GW, are located in Andhra Pradesh.
The Singapore-based utility said on Monday it has entered into an agreement to sell 100% of its holding in Sembcorp Energy India (SEIL) to Tanweer, indirectly owned by a consortium led by Oman Investment Corporation (OIC) in partnership with the Ministry of Defence Pension Fund, Oman and Dar Investment SPC.
The sale is in line with Sembcorp’s strategy to migrate from brown to green energy. As of now, it has a 1,730 MW of green energy generation capacity and an another 700 MW of capacity is under construction. Post the sale, 51% of its global energy capacity of 14 GW will be renewable energy, up from 43% currently. On a pro forma basis, Sembcorp’s share of net profit from its sustainable solutions portfolio for the first half of 2022 will increase from 25% to 31%.
“The sale of SEIL accelerates the transformation of Sembcorp’s portfolio from brown to green, while protecting the interests of all stakeholders. “Sembcorp is committed to India. It does not mean we are exiting from India,” said Wong Kim Yin, Group president and chief executive officer. The company is looking to add more green power capacity in line with its stated objective of becoming a net-zero company by 2050.
Sembcorp Industries said the deal consideration is based on an implied price-to-book multiple of 1.0 time and it believes shareholder value will be preserved. Tanweer Infrastructure will settle the final consideration via a deferred payment note (DPN), bearing an interest at a rate per annum equal to 1.8% plus a benchmark rate equal to the Indian government 10-year bond yield spot rate, minus a greenhouse gas emissions intensity reduction incentive rate.
Vipul Tuli, managing director, SEIL, said the company was already one of the largest wind power generators in India. “We continue to seriously evaluate multiple additional wind, solar and other green opportunities within India. So, we expect our investments in India to not only continue but actually be accelerated in strength as a result of this transaction,” Tuli said.
The new promoter of SEIL will retain all the employees of the company. The proposed deal is likely to be completed by March-April next year.