Temasek cites current market conditions as the cause, but sale not off the table
By
Fiona Chan
PowerSeraya is South-east Asia's first combined heat, water and power supplier. It is also building a $800 million cogeneration plant to be ready in 2010. -- POWERSERAYA
TEMASEK Holdings has halted its sale of power generation company PowerSeraya, as deepening pessimism about the global economy thwarts corporate deal-making plans around the world.
The Singapore investment company yesterday said it would shelve tender plans for PowerSeraya, the last of three local generators to be auctioned off this year, owing to 'market conditions'.
The deal, which reports suggested could be valued at up to US$2.5 billion (S$3.82 billion), has been dogged by rumours of delay as the financial turmoil intensified in recent weeks.
Temasek's announcement came hours after another billion-dollar plan was pulled off the table yesterday. BHP Billiton, the world's largest mining company, abandoned its US$66 billion hostile bid for rival Rio Tinto in a surprise decision, citing concerns about the deterioration of global economic conditions.
Temasek's director of investment, Ms Gwendel Tung, said the Singapore investment company launched the tender process for PowerSeraya early last month 'based on indications of interest from investors'. 'In the light of the market conditions, we have decided not to proceed further,' she said in a statement.
But Temasek added that it 'remains committed to divest all its power-generating companies in Singapore'.
In March, Temasek sold Tuas Power for $4.235 billion to China Huaneng Group, while Senoko went to Japanese/ French consortium Lion Power in September for about $4 billion.
The sale of PowerSeraya, along with the other two, is a bid by Temasek to liberalise the domestic energy market.
'We are flexible as to how and when we will revisit the divestment of PowerSeraya,' said Ms Tung. Temasek has said that its deadline for selling the 3,100MW power generation company is the middle of next year.
PowerSeraya, which has a 30 per cent share of Singapore's power market, will continue to operate 'as usual' under its board of directors and management.
The Business Times reported this month that three foreign groups had been shortlisted for the PowerSeraya tender: Malaysia's YTL, Bahrain's Arcapita and a consortium led by Hong Kong's CLP Group. YTL and CLP were said to be among the bidders shortlisted for Senoko Power, Singapore's biggest power generation company, while Arcapita had put in an offer for Tuas Power, the smallest.
PowerSeraya posted a 30 per cent jump in full-year profit to $218 million two months ago, on the back of a 6 per cent increase in revenue to $2.79 billion.
Earlier this year, it opened its own desalination water plant in Jurong Island, making it South-east Asia's first combined heat, water and power supplier. It is also building a $800 million cogeneration plant to be ready in 2010.
