Sembcorp Industries (Sembcorp) will invest $301 million to increase its stake in a renewable energy business in India.
Sembcorp's wholly-owned subsidiary Sembcorp Utilities has agreed to acquire IDFC Private Equity Fund III's remaining stake in Sembcorp Green Infra (SGI) for 14.1 billion rupees (approximately S$301 million).
This comes after Sembcorp Utilities had raised its stake in SGI to 72 per cent for one billion rupees in August this year.
Sembcorp said SGI is one of the largest renewable energy providers in India, operating in seven states there.
It was awarded 250MW in India's first national wind power tender earlier this year, reflecting the strength of its capabilities, said Sembcorp.
"Buying IDFC's stake in SGI reaffirms Sembcorp's commitment to a long-term presence in India.
"The deal will allow us to drive SGI's growth as the 100 per cent owner, and increase our investment in a wind and solar generation portfolio that strongly complements our thermal power assets in the country," said Sembcorp group president and chief executive Neil McGregor.
Strengthening our investment in renewables will also help us stay abreast of advances in greener power generation, and will enable us to deliver electricity to our customers in an increasingly sustainable manner.
SEMBCORP GROUP PRESIDENT AND CHIEF EXECUTIVE NEIL MCGREGOR, on the group's investment.
"Strengthening our investment in renewables will also help us stay abreast of advances in greener power generation, and will enable us to deliver electricity to our customers in an increasingly sustainable manner," he noted.
Mr Vipul Tuli, chief executive and country head of Sembcorp India, said that with the extensive energy reforms and electrification underway in India, there is a demand for both renewable and thermal power in the country.
SGI has close to 1,200MW of wind- and solar-power capacity in operation and under development.
As at end-2016, the net asset value and net tangible asset value at SGI level were $427.6 million and $426.9 million, respectively.
The net profit at SGI level for the year ended Dec 31 was about $39 million.
Sembcorp said the acquisition will be funded through a mix of internal funds and borrowings, and payment will be settled in Indian rupees. Completion of the deal is expected to take place in the first quarter of next year.
It added that the effect of the acquisition on its net tangible assets per share and earnings per share is immaterial, assuming the transaction was effected at Dec 31, 2016 and Jan 1, 2016 respectively.
Sembcorp shares yesterday ended two cents higher at $2.98.