SG’s Sembcorp said to mull stake sale in India thermal power biz

Power grids. Photo: Fré Sonneveld/unsplash

Singapore-based Sembcorp Industries Ltd has appointed Rothschild to find a strategic investor for its thermal power generation business in India, said two people aware of the development.

On offer is a stake sale in Sembcorp Energy India Ltd’ (SEIL) 2.64 gigawatt (GW) coal-fuelled power project in Andhra Pradesh, and comes in the backdrop of a fundamental change in the investment culture, with multilateral and bilateral agencies as well as sovereign wealth funds ceasing investments in businesses that contribute to climate change.

“India remains a key market for Sembcorp. As earlier communicated to the market, we will continue to explore various strategic options to unlock value,” said a Sembcorp Energy India spokesperson in an emailed response.

A Rothschild India spokesperson in an emailed response said it refuses to comment on “market speculation”.

With total assets of over SG$24 billion, the Singapore Exchange-listed Sembcorp is among the few foreign utilities that owns thermal power assets in India. Others include American firm AES and Hong Kong-based CLP Holdings.

Sembcorp’ India unit—SEIL, has a 4.3 GW portfolio of thermal and renewable energy assets, which includes the 2.64 GW coal-fuelled Andhra Pradesh project. It also has 1.7 GW wind and solar power projects across seven states in India.

Of India’s installed power generation capacity of 370.49 GW, coal-fuelled projects account for 54% or 198.52 GW. The share of clean energy capacity is rapidly increasing with it now accounting for more than a fifth of India’s installed power generation capacity. India has 34.6 GW of solar power and 38GW of wind power, and runs the world’s largest clean energy programme.

Sembcorp, in 2010, made its first power sector investment in India, when it acquired a stake in Gayatri Energy Ventures’ Thermal Powertech Corp. India, a 1,320MW thermal power plant. Sembcorp Industries announced in December that its wholly-owned subsidiary Sembcorp Utilities has signed an agreement with its local partner, Gayatri Energy Ventures Pte Ltd (GEVPL), a wholly owned subsidiary of Gayatri Projects Limited (GPL), to acquire the remaining 5.95% stake in SEIL.

This stake sale plan comes at a time of India’s power demand, which had nosedived, slowly returning to its pre-lockdown levels. Of India’s total electricity demand load pattern, industrial and agricultural consumption accounts for 41.16% and 17.69%, respectively. Commercial electricity consumption accounts for 8.24% of demand.

Consumption of energy—especially electricity and refinery products—is typically linked to overall demand in an economy.

This article was first published on livemint.com.

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.