Tenaga Nasional Berhad buys 50% stake in UK solar firm for $607m

Combined capacity is at 365MW.

Tenaga Nasional Berhad, Malaysia's national electric utility company, completed the acquisition of a 50% interest in one of the UK's largest portfolios of operating solar power assets, with a combined capacity of 365 MW.

TNB is one of the largest utility companies in Asia with a market capitalisation of approximately USD 18 billion and a total power generation capacity of around 13GW, predominantly in Malaysia. The c. GBP 470 million transaction is TNB's first investment in renewable generation capacity in Europe. The acquisition was made as part of TNB's ongoing five-year international expansion plan and achieves one it is main objectives, to acquire up to 250 MW of renewable energy capacity by 2020.

The acquisition was made via Vortex Solar UK Limited, an indirect wholly owned subsidiary of a TNB joint venture, Vortex Solar Investment S.a.r.l. ('Vortex'), which acquired a 100% interest in the portfolio. TNB has a 50% shareholding in Vortex alongside Beaufort Investments S.a.r.l. which holds the balance of 50%.

Vortex Solar UK Limited signed a Sale and Purchase Agreement in January with a subsidiary of Terraform Power Inc. to acquire the solar portfolio which includes 24 solar photovoltaic farms, one of Britain's largest solar power portfolios.

TNB funded the acquisition from the proceeds of a US$750 million sukuk issued by the company in October 2016.

Datuk Seri Ir. Azman bin Mohd, TNB's CEO, said: "We are pleased to complete this acquisition, which was a rare opportunity to acquire a sizeable solar power business in the UK. The acquisition also helps us deliver the renewable energy part of TNB's international expansion plan more than one year ahead of schedule."

"The assets are an excellent investment and are earnings enhancing, with 80% of revenue under long term, 15-year power purchase agreements and subsidized by Renewable Obligation Certificates for 20 years."

With the completion of the acquisition, TNB's international renewable energy portfolio will have a combined net installed capacity of 252 MW following acquisitions in power companies in India and Turkey in 2016.