Sembcorp buys UK Power Reserve for $385m

A new acquisition by Sembcorp Industries will give it a wider foothold in Britain's energy sector.

The firm has bought energy generator UK Power Reserve (UKPR) for £216 million (S$385 million) in cash after a "competitive process".

Sembcorp said the deal brings flexible assets and solutions as well as merchant energy capabilities. It is part of its strategy to rebalance its energy portfolio towards developed markets.

UKPR is said to be Britain's largest flexible distributed energy generator.

It owns and operates projects across 32 locales in England and Wales, with 533 megawatts in operation and a further 480 megawatts in construction and under development, Sembcorp said in a Singapore Exchange filing.

Its portfolio comprises small-scale, fast-ramping power generation assets and rapid response batteries, which help to counter the intermittency of renewable power sources.

"Connected at the distribution level close to customer load, UKPR's assets require less investment in large power infrastructure, and are more economical to develop and operate," Sembcorp noted.

BUSINESS EXPANSION

The deal will also build up Sembcorp's merchant energy business, which we have identified as an area of focus for the group."

SEMBCORP GROUP PRESIDENT AND CEO NEIL MCGREGOR

It said the acquisition will be funded via internal cash resources and external borrowings.

Once the transaction is completed by the end of the week, Sembcorp will consolidate all assets and liabilities of UKPR, including net debt.

Sembcorp group president and chief executive Neil McGregor said the deal will transform the group's British business "from a centralised utilities provider on Teesside, into an integrated energy business with operations across the country".

"The deal will also build up Sembcorp's merchant energy business, which we have identified as an area of focus for the group."

Sembcorp shares eased one cent to $2.93 yesterday after the announcement was made.

A version of this article appeared in the print edition of The Straits Times on June 01, 2018, with the headline 'Sembcorp buys UK Power Reserve for $385m'. Print Edition | Subscribe