HONG KONG/SINGAPORE (Feb 22): Ananda Krishnan, ranked by Forbes as Malaysia's second-richest man, has put his entire power portfolio up for sale in a deal that could fetch more than $2 billion, three sources familiar with the matter told Reuters on Wednesday.
Standard Chartered Plc has been hired to run the sale of stakes in about a dozen power plants in Egypt, Malaysia, the Middle East and South Asia, with a net generating capacity of nearly 4,000 megawatts (MW), the sources said.
If the sale fetches more than $2 billion, it would be the biggest power deal in Southeast Asia since 2008, when Temasek Holdings [TEM.UL} sold its Singapore generation company PowerSeraya to Malaysia's YTL POWER INTERNATIONAL BHD [] for S$3.8 billion ($3.03 billion).
The sources asked not to be named as they are not authorised to speak to the media on the matter.
Krishnan, reckoned by Forbes to have assets of $9.5 billion last year, owns his power assets through Tanjong Energy Group, which, according to Tanjong's website, owns and operates eight power plants and has investments in five in Bangladesh, Egypt, Malaysia, Pakistan, Sri Lanka and the United Arab Emirates, with a total net generating capacity of 3,951 MW.
Tanjong Energy is wholly-owned by Tanjong Plc, which Krishnan took private in July 2010 in a deal valued at about $2.8 billion.
Standard Chartered and Tanjong declined to comment.
Krishnan maintains a low profile and little is known about his private life. It was not immediately clear why he was putting up the assets for sale.
His executives have launched a number of corporate deals in recent years, relisting part of his Maxis Bhd telecommunications services provider in what was Southeast Asia's biggest initial public offering in 2009. Last year, his team relisted Malaysian oil and gas services provider Bumi Armada Bhd.
Krishnan has also privatised Malaysian pay-TV monopoly ASTRO ALL ASIA NETWORKS PLC [] after a money-losing expansion into Indonesia and India weighed on the company's finances.
INTEREST
Tanjong Energy has three gas-fired power plants in Malaysia with combined capacity of 1,490 MW.
The sale of power assets could attract Malaysian power companies as well as regional power investment firms from the Middle East, the sources said.
They said most of the power plants being sold by Krishnan's Tanjong held long-term power purchase agreements (PPAs), which provided extended profit guarantees for the projects, and hence could attract buyers.
But the PPAs for its power plants in Malaysia are expiring in several years and face renewal with state utility TENAGA NASIONAL BHD [], which posted a third consecutive quarterly loss in January, one source said.
"Negotiations with Tenaga could be tough when the current contracts expire," a source said, adding the Egypt asset could also be a hard sell given the recent political turmoil in the North African country.
News of the possible asset sale comes a day after sources told Reuters that AES Corp, the first U.S. power producer to enter China about two decades ago, was looking to sell all or some of its assets there, hobbled by not being able to pass on higher coal costs in a state-regulated industry.
The sources said Arlington, Virginia-based AES, which has a market value of around $10.5 billion, had hired an investment bank to kick off the process. A sale or sales could potentially be worth $300-$400 million. - Reuters
Standard Chartered Plc has been hired to run the sale of stakes in about a dozen power plants in Egypt, Malaysia, the Middle East and South Asia, with a net generating capacity of nearly 4,000 megawatts (MW), the sources said.
If the sale fetches more than $2 billion, it would be the biggest power deal in Southeast Asia since 2008, when Temasek Holdings [TEM.UL} sold its Singapore generation company PowerSeraya to Malaysia's YTL POWER INTERNATIONAL BHD [] for S$3.8 billion ($3.03 billion).
The sources asked not to be named as they are not authorised to speak to the media on the matter.
Krishnan, reckoned by Forbes to have assets of $9.5 billion last year, owns his power assets through Tanjong Energy Group, which, according to Tanjong's website, owns and operates eight power plants and has investments in five in Bangladesh, Egypt, Malaysia, Pakistan, Sri Lanka and the United Arab Emirates, with a total net generating capacity of 3,951 MW.
Tanjong Energy is wholly-owned by Tanjong Plc, which Krishnan took private in July 2010 in a deal valued at about $2.8 billion.
Standard Chartered and Tanjong declined to comment.
Krishnan maintains a low profile and little is known about his private life. It was not immediately clear why he was putting up the assets for sale.
His executives have launched a number of corporate deals in recent years, relisting part of his Maxis Bhd telecommunications services provider in what was Southeast Asia's biggest initial public offering in 2009. Last year, his team relisted Malaysian oil and gas services provider Bumi Armada Bhd.
Krishnan has also privatised Malaysian pay-TV monopoly ASTRO ALL ASIA NETWORKS PLC [] after a money-losing expansion into Indonesia and India weighed on the company's finances.
INTEREST
Tanjong Energy has three gas-fired power plants in Malaysia with combined capacity of 1,490 MW.
The sale of power assets could attract Malaysian power companies as well as regional power investment firms from the Middle East, the sources said.
They said most of the power plants being sold by Krishnan's Tanjong held long-term power purchase agreements (PPAs), which provided extended profit guarantees for the projects, and hence could attract buyers.
But the PPAs for its power plants in Malaysia are expiring in several years and face renewal with state utility TENAGA NASIONAL BHD [], which posted a third consecutive quarterly loss in January, one source said.
"Negotiations with Tenaga could be tough when the current contracts expire," a source said, adding the Egypt asset could also be a hard sell given the recent political turmoil in the North African country.
News of the possible asset sale comes a day after sources told Reuters that AES Corp, the first U.S. power producer to enter China about two decades ago, was looking to sell all or some of its assets there, hobbled by not being able to pass on higher coal costs in a state-regulated industry.
The sources said Arlington, Virginia-based AES, which has a market value of around $10.5 billion, had hired an investment bank to kick off the process. A sale or sales could potentially be worth $300-$400 million. - Reuters
