Huaneng buys Singapore's Tuas Power for $3 billion

SINGAPORE Fri Mar 14, 2008 6:12am EDT

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SINGAPORE (Reuters) - Singapore state investor Temasek Holdings TEM.UL on Friday said China's Huaneng Group will pay S$4.2 billion ($3.04 billion) for Tuas Power, the largest overseas purchase by a Chinese power firm.

Temasek said in a statement Huaneng, China's largest independent electricity provider, will complete the purchase by March 24 of Tuas Power, the first of three generating companies that the city-state hopes to sell by mid-2009.

"This transaction represents a major step for China Huaneng in its goal to diversify its assets across geographies and technologies," the Chinese company's vice president Huang Long said in the statement.

Lehman Brothers LEH.N, the financial advisor to Huaneng, said this was the largest ever acquisition overseas by a Chinese power company.

Huaneng's winning bid works out to about 24 times the S$177 million net profit Tuas reported for the 12 months to March 2007.

Huaneng Power (600011.SS) (0902.HK), the group's Hong Kong-listed unit, trades at a price-earnings multiple of 9, while Hong Kong's largest power utility CLP Holdings (0002.HK) trades at a P/E of 14, according to Reuters data.

The Chinese company beat at least two other firms including Bahrain's Arcapita and India's GMR Infrastructure (GMRI.BO).

Several other companies such as Malaysia's Tanjong TJPL.KL and Li Ka-shing's Hongkong Electric (0006.HK) withdrew from the bidding after being involved in the earlier stages.

Several of the withdrawals were linked to European banks scaling back their financing commitments, a banker said.

Tuas is the newest, but smallest, of the three generating companies being divested by Temasek, with 2,670 megawatts (MW) of electricity generating capacity.

Its assets include oil-fired plants with a capacity of 1,200 MW as well as 1,470 MW in gas-fired electricity plants, and the company generates about a quarter of Singapore's electricity.

With the competition of the Tuas sale, Temasek is expected to proceed with the divestment of the larger 3,100 MW PowerSeraya and the 3,300 MW Senoko Power.

(Additional reporting by Saeed Azhar in Kuala Lumpur and Tony Munroe in Hong Kong, editing by Neil Chatterjee)

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