Sembcorp to acquire 35 percent interest in China’s SDIC New Energy for CNY1.5B

China yuan coins

Sembcorp Industries‘ wholly owned subsidiary Sembcorp Energy (Shanghai) has entered a deal to acquire 35 percent of SDIC New Energy, which operates 30 wind and solar PV assets, for 1.5 billion yuan, or around S$320 million, the Singapore-listed company said Thursday.

The seller of the stake is China state-owned investment holding company State Development Investment Corporate Group (SDIC)’s Shanghai SDIC Xieli Development Equity Fund Partnership (Xieli Fund), Sembcorp said in a filing to SGX.

Sembcorp said the deal, expected to be completed in the first half of 2022, would be funded with a combination of internal cash resources and external borrowing. The acquisition is expected to be earnings accretive in its first year, Sembcorp said.

SDIC New Energy’s portfolio has total installed capacity of 1.9GW across seven Chinese provincial regions, the filing said.

The holder of the remaining 65 percent of SDIC New Energy is SDIC Power, the publicly listed power arm of SDIC, the filing said.

Alex Tan, CEO of China for Sembcorp Industries, said the Singapore-listed company was “keen” to expand its renewables portfolio in China, which is the largest and fastest-growing renewables market.

“SDIC Power is a top SOE power company in China, with a strong track record and capabilities in the China power and clean energy industry. We believe we have complementing strengths, and we are committed to work alongside SDIC Power to drive further growth in renewables through this joint venture,” Tan said in the statement.

Wong Kim Yin, group president and CEO of Sembcorp Industries, said the company was committed to reaching its target of 10GW of installed renewable capacity by 2025; along with the recent 658MW acquisition, the renewable portfolio is expected to reach 6.1GW, he said.

In mid-November, Sembcorp said it entered a deal to acquire a 98 percent stake in a portfolio of operational wind and solar assets from CGN Capital Partners Infrastructure Fund III and its affiliates for around 3.3 billion yuan, or around S$700 million.