Published October 30, 2008

PowerSeraya sale may be closed by early Dec

Company may start roadshows for bidders next week

By RONNIE LIM
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CONTRARY to some market speculation of delays given the financial turmoil, Temasek Holdings' sale of PowerSeraya - launched on Oct 7 - remains on track, sources said, with the first bids already in.

Vying for power: Some half a dozen bidders, including Sembcorp and Keppel Corp, are understood to be vying for PowerSeraya

Some half a dozen bidders, including local corporates Sembcorp and Keppel Corp, are understood to be vying for the generating company (genco), which is the last of the big three here being divested by the Singapore investment company - with the sale expected to be completed as soon as early December.

'The sale should take about as long as that of Senoko Power,' a source said, suggesting that given the earlier indicative interest of bidders and experience gained from the earlier two genco sales, PowerSeraya's sale should be sewn up in just a few months.

Despite the financial crisis, observers said that Temasek clearly had a certain level of confidence before proceeding with this last genco sale.

Besides, it is again offering 'staple financing', or a pre-arranged financing package, if needed by bidders.

Market talk of a likely delay surfaced after submission of bids - the first of a two-stage sales process - closed on Oct 20, with no word thereafter of when the second stage would start.

With the bids now in - other parties reportedly vying for PowerSeraya include India's Tata Power, Bahrain investment bank Arcapita and Hong Kong's CLP Holdings - PowerSeraya management is said to be already 'on standby' to start conducting individual 'roadshows' for the bidders from next week.

Bidders then make their final binding offers after a comprehensive inside look at the genco, including its books.

PowerSeraya with 3,100 megawatts capacity is the second largest genco here. It is planning to grow from just a plain-vanilla power company (with power generation currently accounting for 80 per cent of its net profits) to a fully integrated energy company.

Under its diversification plans, in five years' time, it expects oil trading, including that of natural gas and marine bunkers, plus the sale of utilities like steam and water to petrochemical plants, to account for half its profits.

Temasek first embarked on the sale of the three biggest gencos here a year ago - last October - starting with the 2,670 MW Tuas Power, the smallest but newest genco.

Tuas was sold to China Huaneng Group for S$4.235 billion in mid-March this year, while the 3,300 MW Senoko Power, the largest genco, went to Japanese/French group Lion Power for about S$4 billion last month.

With PowerSeraya now expected to be sold in early December, Temasek is half a year ahead of its targeted mid-2009 deadline to complete the entire genco divestment.