Sembcorp to acquire renewables assets in China, bringing renewables capacity to 9.4GW

Sembcorp Industries has, through its wholly-owned subsidiary Sembcorp Energy (Shanghai), signed definitive agreements with Wuling Power, the affiliated company of State Power Investment Corporation Limited (SPIC), to acquire a 45.3% interest in Hunan Xingling New Energy for a total equity consideration of approximately RMB1,058 million ($204 million).

Wuling Power holds the remaining 54.7% interest in Xingling New Energy, says Sembcorp in a Nov 17 press release.

Xingling New Energy will own a portfolio of wind and solar assets comprising 830 megawatts (MW) of installed renewable capacity and 62MW under development in the provinces of Hunan and Guizhou.

Upon completing this transaction, Sembcorp will reach a new milestone of 9.4 gigawatts (GW) of gross renewables capacity globally.

Sembcorp remains committed and focused on achieving its 2025 targets, which includes reaching 10GW of gross installed renewables capacity by 2025.

Wong Kim Yin, group president and CEO of Sembcorp Industries, says: “SPIC is the largest renewables player in the world with over 80GW of installed capacity. Sembcorp is privileged to partner them. We look forward to expanding on this deal to broaden the strategic partnership with SPIC, especially in renewables and green energy.”

Alex Tan, CEO of China, Sembcorp Industries adds: “Xingling New Energy is SPIC’s first renewable energy joint venture with a foreign strategic investor. This partnership will allow Sembcorp to establish a presence in Hunan province, a new market for us. Hunan is one of the key energy demand centres in China, and we look forward to working closely with Wuling Power to support China’s renewable energy needs.”

The consideration for this transaction was determined on a willing-buyer willing-seller basis, considering the operational quality, financials and cashflow generation of the assets via customary valuation techniques.

Sembcorp’s investment will be funded through a mix of internal cash resources and external borrowings. Completion of the transaction is expected in 1H2023, subject to customary conditions precedent including regulatory approvals.

The acquisition is expected to be accretive to earnings upon completion. The acquisition is in the ordinary course of business of Sembcorp Industries and has no impact on the earnings per share and net asset value per share of Sembcorp Industries for the financial year ending Dec 31, 2022.