Tenaga Nasional eyes venturing into UK solar

This will be its third global, albeit small, acquisition after Turkey and India.

Maybank Kim Eng says that Tenaga Nasional's planned foray into UK's solar sector represents its third bite-size international acquisition after transactions in Turkey and India. Financial details are again lacking, and the potential GBP86m (US$105m) cash outlay similarly has minimal impact on Tenaga’s balance sheet health. 

Tenaga has proposed to subscribe for a 50% stake (through subscription of new shares) in Vortex Solar (wholly-owned SPV of the private equity arm of UK-listed EFG-Hermes, a MENA-based investment bank) for GBP86m (US$105m).

Here's more from Maybank Kim Eng:

Vortex Solar in turn, has proposed to buy a UK solar portfolio (comprising 24 operational assets totalling 365MW) from TerraForm Power (US-listed yieldco controlled by bankrupt renewable-energy giant SunEdison) for an enterprise value of c.GBP470m (comprising c.GBP300m of debt). Tenaga expects to complete the transaction by 3Q17.

There is minimal strain to Tenaga’s balance sheet – the deal would not even raise gearing by 1ppt. Like previous transactions, the lack of financial disclosure makes it difficult to pass judgement.

In this instance however, there is a potential intangible in the form of access to solar expertise. Recall Tenaga had (in Dec 2016) received a conditional award from the Malaysia regulator to develop a large-scale 50MW solar farm.

Large-scale solar is still at its infancy in Malaysia, with no plants operational to-date.