SEMBCORP : U96 +5.17% Industries is buying a stake in a renewable energy company in China.

 

This will enable the Singapore-listed energy and urban solutions provider to enter into a partnership with the world&rsquo s largest renewables player.

 

Sembcorp announced on Thursday (Nov 17) that wholly-owned subsidiary Sembcorp Energy (Shanghai) is acquiring a 45.3 per cent interest in Hunan Xingling New Energy for 1.1 billion yuan (S$204 million) from Wuling Power.

 

Wuling Power is an affiliated company of Chinese state-owned enterprise State Power Investment Corporation (SPIC).

 

The transaction will result in Xingling New Energy becoming a joint venture between Sembcorp and Wuling Power, with the SPIC affiliate holding the remaining 54.7 per cent stake in Xingling New Energy.

 

&ldquo SPIC is the largest renewables player in the world with over 80 gigawatts of installed capacity. Sembcorp is privileged to partner them,&rdquo said Wong Kim Yin, Sembcorp Industries&rsquo group president and chief executive officer.

 

&ldquo We look forward to expanding on this deal to broaden the strategic partnership with SPIC, especially in renewables and green energy,&rdquo he added.

 

Sembcorp Industries&rsquo CEO of China, Alex Tan, noted that Xingling New Energy is SPIC&rsquo s first renewable energy joint venture with a foreign strategic investor.

 

&ldquo This partnership will allow Sembcorp to establish a presence in Hunan province, a new market for us,&rdquo Tan said. &ldquo Hunan is one of the key energy demand centres in China, and we look forward to working closely with Wuling Power to support China&rsquo s renewable energy needs.&rdquo

 

Xingling New Energy will own a portfolio of wind and solar assets &ndash comprising 830 megawatts (MW) of installed renewable capacity and 62 MW under development &ndash in the provinces of Hunan and Guizhou.

 

The acquisition will push Sembcorp&rsquo s gross renewables capacity globally to 9.4 GW &ndash one step closer to its target of reaching 10 GW of gross installed renewables capacity by 2025.

 

Sembcorp said the transaction, which is expected to be completed in the first half of 2023, will be funded through a mix of internal cash resources and external borrowings. 

 

It added that, upon completion, the acquisition is expected to be accretive to earnings.