Chow Tai Fook Enterprises said on Thursday it has agreed to sell Alinta Energy for A$6.5 billion (HK$33.7 billion) to Sembcorp Industries, marking one of the largest overseas expansions for the Singaporean company.
Chow Tai Fook, the investment arm of Hong Kong billionaire Henry Cheng Kar-shun, acquired Alinta Energy for A$4 billion in 2017. The sale advances Chow Tai Fook's reorganization efforts after hiring advisers earlier this year to explore options for the business.
For Sembcorp Industries, the transaction gives the energy company control over one of Australia's largest integrated power and gas retailers, with 1.1 million customers and 3.4 gigawatts of energy generation capacity across gas, coal, solar and wind.
Sembcorp said it will also acquire assets from Pioneer Sail Holdings and Latrobe Valley Power (Holdings), although specific details were not disclosed.
The deal will provide Sembcorp access to Alinta Energy's 10.4 GW development pipeline, including offshore and onshore wind, pumped hydro and firming systems, bolstering its presence as Australia pushes toward net zero by 2050.
The Australian Energy Market Operator estimates the nation will require 200 GW of new solar, wind, and storage capacity by mid-century, according to Sembcorp's announcement.
Sembcorp had confirmed on Monday it was evaluating potential acquisitions, including Alinta, after media reports of ongoing negotiations, and said the deal will immediately be earnings accretive.
On a pro forma basis for the year ended December 31, 2024, Sembcorp projects the acquisition will raise its earnings per share by 9 percent to S$0.626, while boosting its return on equity to 22.3 percent from 20.3 percent.
Sembcorp described the acquisition as providing a "ready-made growth pipeline" in Australia, a AAA-rated and policy-stable market, avoiding the challenges of building new assets from the ground up.
Staff reporter and Reuters
