PHOTO: COURTESY OF POWER SERAYAThe news in the papers really shocked me! Power Seraya was sold to Malaysia's YTL for a really good price of $3.8billion, the least among the 3 power plants. This also surprised many market analysts.
The price tag of $3.8billion is low compared to Tuas Power being sold to Chinese firm Huaneng for $4.23 billion and Senoko Power to a consortium led by Marubeni Corp for $4 billion.
My question is why the sale of a Key National Assets to a foreign company. Thank God, Singaporeans are not like citizens of other countries, we don't take to the streets. Most recent case, the sale of Thailand telecommunication to Temasek caused a out cry among the Thais and that lead to them taking to the streets.
Since both GIC and Temasek has reported good growth and healthy dividen growth why is there a need to sell of all 3 of Singapore's power plant?
Just wondering will this 3 Gencos gang up like those fuel supply companies...after all is the 2 are in the oligopoly market.. .. remember the days when our fuel exceed $2 per liter? It just take 1 company to increase it prices and the rest will follow..vice versa...
Reports by Straits Times:-
TEMASEK Holdings has stunned the market by announcing that it has sold electricity generator Power-Seraya to a unit of Malaysia's YTL Power International for $3.8 billion.
This came just a week after the Singapore investment company said it would shelve tender plans for PowerSeraya, owing to 'market conditions'.
Market talk had suggested that relatively poor investor interest and lower-than-expected indicative bids by investors had led to Temasek's earlier decision.
Temasek said in a statement yesterday, however, that Sabre Energy, a wholly-owned unit of YTL Power, would pay $3.6 billion for PowerSeraya and assume $201 million of its adjusted net debt as at March 31 this year.
The transaction for PowerSeraya - the third and last of the electricity generation companies (gencos) to be sold by Temasek - is expected to be completed early next year.
In June last year, Temasek announced it was selling the three gencos to liberalise the power generation industry. It had targeted to complete the sale by the middle of next year.
Ms Gwendel Tung, Temasek's director of investment, said yesterday that after the company put a stop to the tender process last week, YTL Power submitted an 'unsolicited proposal' that met Temasek's requirements.
Referring to YTL Power, Ms Tung said: 'We are confident that their expertise and experience will add significant value to Singapore's electricity market and PowerSeraya in particular.'
Other factors may have also come into play. One possibility, suggest industry watchers, is that the funds will come in handy in helping cushion losses from other investments that have soured amid the global financial crisis.
They say another possibility concerns Temasek's outlook on market conditions. Temasek might have worried that, with asset prices declining rapidly, it might not have been able to secure such an 'acceptable' price again had it 'procrastinated'.
Temasek's other gencos fetched higher prices. Tuas Power went to Chinese firm Huaneng for $4.23 billion. Senoko Power, meanwhile, was sold to a consortium led by Marubeni Corp for $4 billion.
A third theory concerned the other bidders for PowerSeraya, which were said to be a Hong Kong CLP Holdings-led consortium and Bahrain's Arcapita.
Due to deteriorating market conditions, and with banks taking more precautions on lending, Temasek might have been concerned over whether these bidders would face difficulties in financing the deal.
Temasek declined yesterday to comment on the talk and also declined to provide the names of the shortlisted bidders.
The sale of the three gencos is aimed at liberalising the power generation industry. Private ownership can trigger stronger competition, possibly leading to lower costs and lower electricity prices.
The acquisition of PowerSeraya is not YTL Power's first foray into Singapore-based assets.
Its parent company, YTL Corp, owns majority stakes in two Sentosa Cove projects. In November last year, the group made history here by paying $2,525 per sq ft per plot ratio for Westwood Apartments in Orchard Boulevard - the most expensive site to be sold collectively.
YTL Power managing director Francis Yeoh said the 3,100MW of licensed capacity operated by PowerSeraya would give YTL Power 'significant participation' in the Singapore energy market.
YTL Power believes its participation in Singapore's electricity market will put it in a prime position to contribute towards the liberalisation of the Malaysian electricity market.
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