Sembcorp to buy remaining 5.95% stake in Sembcorp Energy India Limited

SEMBCORP Industries' wholly-owned subsidiary Sembcorp Utilities has entered into a non-binding term sheet with its local Indian partner, Gayatri Energy Ventures Pte Ltd (GEVPL) to acquire the remaining 5.95 per cent stake in Sembcorp Energy India Limited (SEIL) for INR 4,060 million (approximately S$77 million) in cash.

Following the completion of the proposed acquisition, Sembcorp will become the sole owner of SEIL.

The purchase price is based on discounted cash flows and relevant transaction multiples, according to Sembcorp. There are also potential future earn-outs for GEVPL on the achievement of certain milestones by SEIL.

The acquisition will be funded through a mix of internal funds and borrowings.

SEIL, Sembcorp's India energy arm, is said to be a leading independent power producer in the country focused on growing a clean energy portfolio.

Sembcorp said that the proposed acquisition will allow it to have the flexibility as sole owner to evaluate and pursue a full range of growth opportunities in the renewables segment, while at the same time seeking the right equity window to list its India business or to pursue other capital-recycling options.

The proposed acquisition is expected to be completed by the end of the year, subject to the satisfaction of certain conditions, including shareholders' approval.

Negotiations on the definitive agreements are currently ongoing and an announcement will be made when there are material developments.

The acquisition is not expected to have a material impact on the earnings per share and net asset value per share of the group for the financial year ending Dec 31, 2019.