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Temasek seeks buyer for PowerSeraya

The Singaporean sovereign wealth fund could fetch an estimated $2.5bn in what will be its third power company sale in 2008.

Temasek is shopping PowerSeraya, a wholly-owned power generation company in Singapore with revenues of S$2.8 billion ($1.9 billion; €1.4 billion) and EBITDA of S$355 million for the year ending 31 March 2008.

A Reuters report pegged the potential sale at $2.5 billion, and the company said the auction has attracted interest from “a number of potential bidders”.

Temasek last year said it would sell three power generation companies in Singapore by the end of 2009, and has recently sold two.

In September, the fund sold Senoko Power, the city-state’s largest energy producer, to Lion Power for S$3.7 billion. Lion Power is a special purpose acquisition company backed by a consortium of Japanese energy companies and other businesses. In March, Temasek sold Tuas Power to China Huaneng Group for S$4.2 billion.

PowerSeraya has a generation capacity of 3,100-megawatts. It accounts for about 28 percent of Singapore’s electricity generation units sold in 2007.

Temasek has over the last year made a number of divestments, particularly in Asia. In the financial year ending in March 2008, its divestments in Asia alone stood at S$12 billion.

Last week, Temasek sold its stake in Bank Internasional Indonesia to Malaysia Maybank along with Korea’s Kookmin Bank. Maybank paid 4.26 billion ringgit ($1.2 billion; €900 million) for a 56 percent stake in the Indonesian bank, of which Temasek received $930 million, the Financial Times reported.

The financial sector accounts for about 40 percent of Temasek’s S$185 billion portfolio. In August, Manish Kejriwal, a senior managing director at Temasek, said at a press conference in Singapore that “the financial services industry is one we believe in because in emerging markets like Asia, we see its growth as a proxy of economic growth, especially in China, India and Indonesia”.

At the end of last month, Temasek further increased its stake in Merrill Lynch from 9.4 percent to 13.7 percent, after receiving US antitrust approval to do so. Temasek is the largest shareholder in Merrill. It also has a 19 percent stake in Standard Chartered, and is the largest shareholder in that bank as well.