Date: 18 September 2024
Broker: Maybank Research Pte Ltd

Strategic Acquisition of Senoko Energy Stake

Sembcorp Industries (SCI) and its wholly-owned subsidiary, Sembcorp Utilities, have entered into a sale and purchase agreement with Engie Global Developments (Engie). Under this agreement, SCI will acquire a 30% interest in Senoko Energy from Engie, a major supplier of electricity in Singapore. This acquisition will be funded through SCI’s internal cash resources and/or external borrowings.

Significance of the Acquisition

Senoko Energy plays a crucial role in Singapore’s electricity supply. This acquisition is seen as complementary to SCI’s existing portfolio of energy assets. By adding Senoko Energy to its holdings, SCI will enhance its capability to support Singapore’s energy transition. This strategic move aligns with Singapore’s broader energy objectives and boosts SCI’s position within the energy sector.

Regulatory and Shareholder Approvals

The deal is subject to several conditions. It requires regulatory approval from the Energy Market Authority of Singapore. Additionally, it depends on the exercise or waiver of pre-emption rights from the other shareholders of Senoko Energy. The transaction is expected to be completed by the fourth quarter of 2024.

Earnings Impact

Upon completion, the acquisition is anticipated to be accretive to SCI’s earnings. This means that SCI’s overall financial performance will improve as a result of this transaction, further solidifying its strong position within the energy sector.