Sembcorp to acquire Australian power company Alinta Energy in A$6.5 billion deal

[SINGAPORE] Sembcorp Industries will acquire Australia’s fourth-largest utilities provider Alinta Energy.

In a bourse filing on Thursday (Dec 11), Sembcorp said that it had entered a share sale agreement with Alinta’s current owner, Hong Kong-based holding company Chow Tai Fook Enterprises.

The agreed enterprise value is A$6.5 billion (S$5.6 billion). The estimated purchase price is A$5.6 billion, which will be paid in cash through bridge and working capital facilities.

Wong Kim Yin, group chief executive Officer of Sembcorp, said: “This acquisition gives us a strong position in a key developed market and provides a scalable platform for Sembcorp to grow renewables and low-carbon solutions.”

The move will add “meaningful scale and diversification to Sembcorp’s portfolio across renewables, energy storage and gas assets”, added the company in its bourse filing.

Sembcorp is making this purchase through its subsidiaries Sembcorp Australia and Sembcorp Energy Australia. Sembcorp Australia will acquire all the shares of Pioneer Sail Holdings (PSH) – the parent company of Alinta, which is owned by Chow Tai Fook Enterprises – and Sembcorp Energy Australia will buy all the shares of Latrobe Valley Power (Holdings), which is owned by PSH.

“Immediate” earnings and returns

The acquisition is expected to be completed in the first half of 2026, subject to shareholder and regulatory approvals.

Sembcorp added that the acquisition will deliver immediate earnings and returns accretion for its shareholders. On a pro forma basis, earnings per share will increase by 14 per cent to S$0.651 and return on equity (ROE) will increase to 22.5 per cent from 19.7 per cent, for the 12 months ended Jun 30, 2025.

Alinta is a major Australian utility company, supplying gas and electricity to around 1.1 million customers. It owns major power-generation facilities of around 3.4 gigawatts, including five gas-fired power plants and one wind farm.

Its net profit for the financial year ended June 2025 was up 15 per cent year on year at A$483 million, and its ROE was 14.6 per cent.

Chow Tai Fook acquired Alinta in 2017 for more than US$3.1 billion, from a group of lenders and investors, including TPG Capital.

Latrobe Valley Power (Holdings), which is also included in the sale, owns and operates the Loy Yang B coal-fired power station in the Australian state of Victoria.

Sembcorp noted that the move marks its entry into Australia, an AAA-rated country that offers a stable regulatory environment that supports long-term investment. Australia’s target to reduce emissions by 62 to 70 per cent from 2005 levels by 2035 and a legislated 2050 net-zero goal are “directly aligned” with Sembcorp’s own ambitions.

It also enables scalable investments in renewables and balances the firm’s portfolio towards developed markets.

But Sembcorp also observed that its near-term emissions will increase because of the acquisition, with emissions intensity expected to increase to around 0.36 tonnes of carbon dioxide equivalent per megawatt hour, with absolute emissions rising to 18.1 million tonnes of carbon dioxide equivalent in 2025.

“(Thus), Sembcorp will not meet its 2028 emissions intensity and 2030 absolute emissions targets,” it said.

Shares of Sembcorp closed Thursday down 0.3 per cent or S$0.02 at S$5.82, before the update.