Temasek sells PowerSeraya for S$3.8bn

The sale of the power company comes a week after Temasek said it had scrapped the auction, citing unfavourable market conditions. It has now sold all three of its power companies in 2008 for a sum of S$11.7bn.

Singapore-owned Temasek Holdings has agreed to sell PowerSeraya, a Singaporean power generation company, to a subsidiary of Malaysia’s YTL Power International for S$3.8 billion ($2.5 billion). The deal comes a week after Temasek had pulled the sale of the company “in light of market conditions”.

Following the termination of the tender process last week, YTL Power International “put forward an unsolicited proposal which met our requirements”, said Gwendel Tung, a director of investments at Temasek.

Power plant: big

YTL subsidiary Sabre Energy Industries will pay S$3.6 billion for PowerSeraya and will assume S$201 million of its debt. The transaction is expected to be completed in early 2009, Temasek said.

PowerSeraya has a generation capacity of about 3,100-megawatts and it accounted for more than a quarter of the island-state’s electricity supply in 2007. For the year ending 31 March 2008, it had revenues of S$2.8 billion and EBITDA of S$355 million.

The sale of PowerSeraya marks the end of a divestment process initiated by Temasek in July 2007. Prior to the sale of PowerSeraya, the sovereign fund sold Senoko Power for about S$3.7 billion in September and in March, it sold Tuas Power to China Huaneng Group for S$4.2 billion.

Temasek manages assets of S$185 billion ($126 billion; €92.3 billion) as of 31 March 2008. It is an active direct investor in private equity, and has invested in a number of private equity funds. It is one of the anchor investors in the $950 million FountainVest China Growth Capital Fund and is reported to have invested $1 billion in Fang Fenglei’s $2.5 billion Hopu Fund. Both funds closed earlier this year.