Tycoon Tan Sri T Ananda Krishnan will face the twin
challenges of pricing and political risks in his attempt to sell his entire
power portfolio, held under Tanjong Energy Sdn Bhd, in Asia and the Middle East
for a reported price tag of US$2 billion (about RM6 billion).
Standard Chartered plc has been hired to run the sale of
stakes in about a dozen power plants in Malaysia, South Asia, Egypt and the
Middle East with a net generating capacity of nearly 4,000MW, according to a
Reuters report quoting unnamed sources.
One industry source told The Malaysian Reserve that word on
the sale has been making its rounds within the industry for about a month now,
although it was not known if it would be a stake sale or sale of assets in
entirety. He said the political risk dimension comes into play as a significant
portion of Tanjong’s power business is in the Egyptian market.
"They may find it tough looking for buyers in view of
Egypt’s troubled political climate. Who wants to go there now?" The source
also pointed out that one of the three Tanjong’s power plants in Malaysia has
less than five years to go on its power purchase agreement (PPA), another
factor diminishing the attractiveness of the asset.
In Malaysia, Tanjong’s power plants are the 440MW gasfired
open cycle Telok Gong Power Station 1 and 720MW gas-fired combined cycle Telok
Gong Power Station 2 as well as the 330MW gas-fired combined cycle Tanjong
Kling Power Station, all situated in Malacca, according to Tanjong’s website.
In Egypt, it owns three 682.5MW gas-fired thermal power
stations namely the Port Said East Power Station, Suez Gulf Power Station and
Sisi Krir Power Station 3&4.
If the sale fetches more than US$2 billion, it would be the
biggest power deal in South-East Asia since 2008, when Temasek Holdings sold
its Singapore generation company PowerSeraya to Malaysia’s YTL Power
International Bhd for S$3.8 billion (RM9.18 billion), Reuters reported.
Another power industry executive, who is aware of the sale
from "market talk", is of the opinion that the saleability of the
assets depended on the appetite of potential buyers. "If they are prepared
to take on the risk of running a power plant in Egypt, why not?"
Additionally, he said "a lot depends on what the
buyer’s interest is at the end of the day and until clearer details emerge on
whether the sale would be ‘lock, stock and barrel’ or just stakes in the assets,
the outcome is left to be seen."
He said buyers could be made up of two groups, namely
companies that want to acquire an asset as part of long-term plans or those who
would buy assets, mix and match and then sell them. He added that buyers would
value the assets and PPA to determine the potential of the deals.
Tanjong owns and operates eight power plants and has
investments in five power plants in Malaysia, Egypt, Bangladesh, Pakistan, Sri
Lanka and the United Arab Emirates with a total net generating capacity of
3,951MW, Reuters reported.
Ananda Krishnan’s executives have launched a number of
corporate deals in recent years, including relisting part of his Maxis Bhd
telecommunications services provider in what was South-East Asia’s biggest
initial public offering in 2009. Last year, his team relisted Malaysian oil and
gas services provider Bumi Armada Bhd.
He 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.
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