Sembcorp Industries Ltd, a Singapore-based utilities and marine group, has agreed to acquire the stake it doesn’t already own in Sembcorp Energy India Ltd from local partner Gayatri Energy Ventures Pte. Ltd.
The Singapore company will become the sole owner of Sembcorp Energy after buying Gayatri Energy’s 5.95% stake, it said in a statement.
Sembcorp, through subsidiary Sembcorp Utilities, will buy the stake for around Rs 406 crore ($56.95 million at current exchange rates). This value is based on discounted cash flows and relevant transaction multiples, it said. It will finance the acquisition through a mixture of internal funds and borrowings.
Gayatri Energy, a wholly owned unit of Mumbai-listed Gayatri Projects Ltd, will potentially get future earn-outs based on the achievement of certain milestones by Sembcorp Energy.
Sembcorp said the move will allow it to evaluate and pursue a full range of growth opportunities in the renewable energy segment. It will also evaluate the possibility of listing the India unit or pursue other capital recycling options.
The company, which counts Singapore state investment firm Temasek as an investor, expects the acquisition to be completed by the end of the year subject to the satisfaction of certain conditions.
Sembcorp entered the Indian energy market in 2010. The India unit has a portfolio of thermal and renewable energy assets totalling about 4,300 megawatts.
Last year, Sembcorp had reorganised its India energy operations into a single company to streamline its shareholding. That decision has also helped Sembcorp's Indian unit to improve profitability.
The company posted a net profit of Rs 127.5 crore for the year through March 2019 compared with a net loss of Rs 583 crore the year before, according to its annual report.
Sembcorp Energy had filed draft documents for an IPO in February 2018. At the time, it had said that it planned to raise up to Rs 4,095 crore ($631 million then) by issuing fresh shares. However, it shelved the plan in June.