Marubeni consortium wins Senoko auction

The consortium will pay $2.77 billion to buy Singapore power generator Senoko Power from Temasek.
A Marubeni-led consortium has emerged as the winner of an auction for SingaporeÆs largest power generating company Senoko Power, at an enterprise value of S$3.97 billion ($2.77 billion).

The consortium, named Lion Power, includes JapanÆs Marubeni Corporation with a 30% stake, French firm GDF Suez with 30%, JapanÆs Kansai Electric Power and Kyushu Electric Power with 15% each, and the Japan Bank for International Cooperation with 10%. It was advised by Macquarie.

Temasek will be paid S$3.65 billion in cash and the consortium will take on S$323 million of debt on SenokoÆs books. The deal, on which Temasek was advised by Credit Suisse and Morgan Stanley, will be completed by September 12.

Senoko Power is the largest power generation company in Singapore, with a capacity of 3,300 megawatts, comprising 1,945MW of combined cycle plants, 1,250MW of thermal plants and 105MW of fast-start gas turbines.

For the fiscal year ending March 2008, Senoko Power registered revenues of S$2.5 billion on which it earned an Ebitda of S$245 million. Senoko is being sold at a trailing Ebitda multiple of 16 times.

Temasek announced a plan to sell its three generating companies last year. It embarked upon the Senoko sale in July after completing an auction of Tuas Power in March. Tuas was won by China Huaneng Group with a bid of S$4.24 billion, translating into an Ebitda multiple of 13 times.

Temasek has realised a higher Ebitda multiple for Senoko than it did for Tuas û the smallest of its three assets with a capacity of 2,670MW. However, Tuas was sold at S$1.59 million per megawatt, which is 32% higher than the Senoko price. The latter translates into S$1.2 million per megawatt. Analysts reckon the lower per megawatt price realised for Senoko reflects the age of its assets and the difference in the mix of generating capacity.

ôLion PowerÆs proposal was the most attractive in terms of price and commercial terms among a field of highly reputable investors,ö says Gwendel Tung, director of investment at Temasek. According to media reports, others in the fray for the asset included Keppel Corp, OneEnergy (a joint venture between Hong KongÆs CLP Holdings and Japan's Mitsubishi), IndiaÆs Tata Power and Malaysia's YTL Power.

Media earlier reported that Temasek arranged staple financing for bidders to accelerate the process. According to Reuters Basis Point, bidders were being offered a two-year bridge loan at a cost of 250bp over Libor by banks including SingaporeÆs DBS and United Overseas Bank. However, sources close to the deal suggest that Marubeni, with access to cash-rich Japanese banks, may not draw down on the staple financing.

The third Singapore generating company, Power Seraya, is expected to go on sale shortly. TemasekÆs earlier deadline for the sale of the three assets was end-2009 but, as the firm is running ahead of schedule on the first two sales, sources suggest this could be significantly accelerated.

Japanese companies seeking growth beyond their home borders are pursuing multi-billion dollar M&A deals across a cross-section of target markets. Chinese companies have also been active acquirers this year and as we enter the last quarter of calendar 2008 it seems this will be the year North Asian companies dominate outbound M&A.
¬ Haymarket Media Limited. All rights reserved.
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