Sembcorp unit to buy majority stake in Gelex Group’s subsidiaries for S$218 million
Paige Lim
SEMBCORP Industries will be acquiring majority interests in various subsidiaries of Vietnam’s Gelex Group Joint Stock Company for a maximum equity consideration of about S$218 million.
The move is to boost its renewables portfolio.
The group announced on Friday (Nov 10) that its wholly owned subsidiary, Sembcorp Solar Vietnam, has reached an agreement to purchase majority interests ranging from 73 per cent to 100 per cent in various subsidiaries of Gelex, subject to regulatory and other approvals.
Gelex is a leading industrial production and infrastructure player in Vietnam.
Through this deal, Sembcorp will add 245 megawatt (MW) of operational renewable wind, solar and hydropower assets to its current portfolio in Vietnam, allowing it to expand its renewables presence in the market to over 450MW.
Upon completion of the acquisition, the group’s gross renewables capacity will increase to 12.2 gigawatts in total.
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The assets intended for acquisition are underpinned by long-term power purchase agreements contracted with state-owned enterprise Vietnam Electricity, said Sembcorp. The group added that it plans to continue exploring opportunities in renewable energy in the country with Gelex.
The deal, which is expected to be completed in the first half of 2024, will be funded through a mix of internal cash resources and external borrowings, the group said. It will be payable upon completion.
The group added that the purchase is in the ordinary course of business, and will not have any material impact on its earnings per share and net tangible asset per share for the financial year ending Dec 31, 2023.
As part of its 2023-2028 strategic plan announcement on Monday, Sembcorp had earlier shared that it will invest about S$10.5 billion in renewables, which translates to 75 per cent of its 2024 to 2028 total investments.
Shares of Sembcorp closed at S$5.05 on Friday, down S$0.07 or 1.4 per cent before the announcement.
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