This will be its third global, albeit small, acquisition after Turkey and India.
Maybank Kim Eng says that Tenaga Nasional's planned foray into UK's solar sector represents its third bite-size international acquisition after transactions in Turkey and India. Financial details are again lacking, and the potential GBP86m (US$105m) cash outlay similarly has minimal impact on Tenaga’s balance sheet health.
Tenaga has proposed to subscribe for a 50% stake (through subscription of new shares) in Vortex Solar (wholly-owned SPV of the private equity arm of UK-listed EFG-Hermes, a MENA-based investment bank) for GBP86m (US$105m).
Here's more from Maybank Kim Eng:
Vortex Solar in turn, has proposed to buy a UK solar portfolio (comprising 24 operational assets totalling 365MW) from TerraForm Power (US-listed yieldco controlled by bankrupt renewable-energy giant SunEdison) for an enterprise value of c.GBP470m (comprising c.GBP300m of debt). Tenaga expects to complete the transaction by 3Q17.
There is minimal strain to Tenaga’s balance sheet – the deal would not even raise gearing by 1ppt. Like previous transactions, the lack of financial disclosure makes it difficult to pass judgement.
In this instance however, there is a potential intangible in the form of access to solar expertise. Recall Tenaga had (in Dec 2016) received a conditional award from the Malaysia regulator to develop a large-scale 50MW solar farm.
Large-scale solar is still at its infancy in Malaysia, with no plants operational to-date.
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