camila December 2, 2021

SINGAPORE (THE BUSINESS TIMES) – Sembcorp Industries is acquiring a 35 per cent interest in State Development Investment Corporate Group (SDIC) New Energy, a power company in China with a portfolio of 30 operational wind and solar photovoltaic (PV) assets, for 1.5 billion yuan (S$320 million).

“Sembcorp is keen to build up our renewables portfolio in China, the world’s largest and fastest-growing renewables market,” said Sembcorp chief executive of China Alex Tan in a bourse filing on Thursday (Dec 2).

The investment is part of Sembcorp’s target to reach 10GW in gross installed renewables capacity by 2025.

Its wholly owned subsidiary Sembcorp Energy (Shanghai) Holding has signed an equity transfer agreement with SDIC’s Shanghai SDIC Xieli Development Equity Fund Partnership, to take over its 35 per cent interest in SDIC New Energy. SDIC is a state-owned investment holding company in China.

SDIC New Energy’s portfolio has a total gross installed capacity of about 1.9GW across seven provincial regions in China.

The power company is also 65 per cent owned by SDIC Power, the publicly listed power arm of SDIC.

Mr Tan said he expects Sembcorp and SDIC Power to have complementing strengths, driving further growth in renewables together through the joint venture.

The acquisition will be funded through a mix of internal cash resources and external borrowings, and is expected to be completed in the first half of next year – subject to customary conditions precedent, including regulatory approvals and the signing of a joint venture agreement with SDIC Power.

Sembcorp expects the acquisition will be earnings accretive from the first year of the acquisition. The transaction, however, is not expected to have a material impact on the earnings per share and net asset value per share of Sembcorp for the financial year ending Dec 31.

Last month, Sembcorp also announced that it was acquiring a 98 per cent interest in a portfolio of operational wind and solar PV assets, located in Chinese energy demand centres Hebei, Henan and Shandong provinces. The assets, acquired for 3.3 billion yuan, have a total gross installed capacity of 658MW.

Sembcorp shares closed at $1.93 on Wednesday, up five cents, or 2.7 per cent.