Sembcorp to double renewable energy portfolio in China with $520m acquisition

Sembcorp Energy (Shanghai) Holding, a subsidiary of Singapore-based Sembcorp Industries, has announced its agreement to purchase a 98% stake in a portfolio of operational wind and solar photovoltaic (PV) assets in China for approximately $520 million (around RMB 3.3 billion). This strategic acquisition from CGN Capital Partners Infrastructure Fund III and its affiliates marks a significant expansion of Sembcorp’s renewable energy operations.

The acquired portfolio consists of 658 MW of installed capacity across wind and solar farms, strategically located in the Chinese provinces of Hebei, Henan, and Shandong—regions known for their high energy demand. This move is in line with China’s renewable energy policies, which support these assets with fixed feed-in tariffs, ensuring a stable revenue stream.

Wong Kim Yin, Group President & CEO of Sembcorp Industries, highlighted the acquisition’s alignment with the company’s ambitious sustainability goals: “The acquisition of this renewables growth platform in China is an important step towards our target to have 10GW of gross installed renewables capacity by 2025. We are focused on the execution of our growth strategy across our markets to achieve our brown to green transformation.”

The purchase price was determined through a willing-buyer willing-seller basis, considering factors such as operational quality, financial performance, and cash flow generation of the assets, assessed via customary valuation techniques. Sembcorp stated that the final consideration would be adjusted based on the audited financials at the completion of the transaction, which is expected to be finalized in the first half of 2022. The funding for this acquisition will be managed through a combination of internal cash resources and external borrowings.

Alex Tan, CEO of Sembcorp Industries in China, emphasized the strategic importance of the Chinese market: “China is the world’s largest renewables market, and a priority growth market for Sembcorp. With this acquisition, our renewables portfolio in China will double in gross capacity from 725 MW to 1,400 MW of wind and solar assets. This scalable platform will boost our growth in China and support the building of our operational and technical capabilities.”

The acquisition is subject to conditions precedent, including regulatory approvals. It is not expected to have a material impact on the earnings per share and net asset value per share of Sembcorp Industries for the financial year ending December 31, 2021.

This development is a testament to Sembcorp’s commitment to increasing its renewable energy footprint, particularly in a key market like China, as the company progresses in its transition from fossil-based energy sources to green energy solutions.