Sembcorp to Increase Stake in Sembcorp Energy India Limited to 100%

Sembcorp Utilities has entered into a non-binding term sheet with its local Indian partner to acquire the remaining 5.95% stake in Sembcorp Energy India Ltd

Sembcorp Industries has announced that its wholly-owned subsidiary Sembcorp Utilities has entered into a non-binding term sheet with its local Indian partner, Gayatri Energy Ventures, a wholly-owned subsidiary of Gayatri Projects Limited, to acquire the remaining 5.95 percent stake in Sembcorp Energy India Limited (SEIL). Following the completion of the proposed acquisition, Sembcorp will become the sole owner of SEIL.

The purchase price for the shares is approximately Rs 406 crore in cash and is based on discounted cash flows and relevant transaction multiples. There are also potential future earn-outs for GEVPL on the achievement of certain milestones by SEIL. The acquisition will be funded through a mix of internal funds and borrowings.

SEIL is a leading independent power producer in the country focused on growing a clean energy portfolio. At present, it has a well-balanced and diversified portfolio of thermal and renewable energy assets of more than 4,300 MW. Since the beginning of the year, the firm has commissioned 357 MW for the Solar Energy Corporation of India (SECI) 2 and SECI 3 wind power projects in India, bringing the total commissioned capacity for SECI wind power projects to 607 MW out of 800 MW. This is the largest operational generating capacity among SECI wind auctions, reflecting the strength of SEIL’s capabilities.  

The proposed acquisition will allow Sembcorp to have the flexibility as the sole owner to evaluate and pursue a full range of growth opportunities in the renewables segment, while at the same time seeking the right equity window to list its India business or to pursue other capital recycling options.

The proposed acquisition is expected to be completed by end of the year, subject to the satisfaction of certain conditions precedent, including shareholders’ approval of GPL. Negotiations on the definitive agreements are currently ongoing and Sembcorp will make an appropriate announcement when there are material developments on this matter.

In July, Sembcorp Industries had announced the infusion of equity worth Rs 516.9 crore into SEIL to support its renewable energy business in the country. The equity infusion results in the subscription to 275 million additional shares in the SEIL by the Sembcorp’s wholly-owned subsidiary, Sembcorp Utilities (SCU), the company statement said.