Update TNB to acquire 30% in GAMA Enerji A.S. for US$243m

by **Cals** Tue 15 Dec 2015, 05:14

Update

[size=28]TNB to acquire 30% in GAMA Enerji A.S. for US$243m

By Supriya Surendran / theedgemarkets.com | December 14, 2015 : 8:42 PM MYT

KUALA LUMPUR (Dec 14): Tenaga Nasional Bhd (TNB) ([You must be registered and logged in to see this image.] Valuation: 1.20, Fundamental: 1.30) has signed a share sale agreement (SSA) and shareholders agreement to invest in a 30% stake in Turkish power company GAMA Enerji A.S.for US$243 million (RM1.06 billion).

In its filing with Bursa Malaysia today and in an accompanying statement, TNB said it has entered into a conditional SSA with GAMA Holding A.S, International Finance Corporation (IFC) and GIF Holding I Cooperatief U.A. to purchase 289.49 million sale shares in GAMA Enerji, representing a 30% stake.

The proposed acquisition will be made through a special purpose vehicle (SPV), which will be incorporated later, read the group’s announcement.

GAMA Enerji is a power and water infrastructure development company which owns and operates a large and well-balanced portfolio of thermal, wind and hydro assets in Turkey, as well as a large water conveyance project in Jordan.

It currently has an 840MW natural gas-fired plant and a 45 MW wind power plant under construction in Turkey, which will go live in the third and fourth quarter of 2016, respectively. By 2017, it is expected to have a gross installed capacity of 1,027MW in Turkey.

The company has also developed and operates a large water conveyance project in Jordan.

GAMA Enerji is 73% controlled by GAMA Holding, one of the most prominent conglomerates in Turkey with activities in construction, engineering procurement and construction (EPC) contracting, concessions, trade and energy/ water investment.

IFC, a member of the World Bank Group that focuses on the private sector, has a 20.25% stake in GAMA Enerji; while GIF, a fund managed by the IFC Asset Management Company, controls the remaining 6.75%.

Upon completion of the proposed acquisition, GAMA Holding will have a 50.5% stake in GAMA Enerji, followed by TNB with a 30% stake, IFC with a 14.5% stake and GIF with a 5% stake.

TNB said the partnership will give the group two seats on GAMA Enerji’s board with extensive control rights, as well as the opportunity to place key senior TNB professionals, particularly in finance, operations and maintenance, in GAMA Enerji’s management.

It will also cement a strategic partnership with IFC and GIF, two renowned institutions with many years of experience in developing infrastructure projects in Turkey and the Middle East and North Africa (MENA) region.

TNB's chairman, Tan Sri Leo Moggie, said the investment is an important step in TNB’s strategy to expand into international markets, where power demand is rising.

“It is in line with TNB’s five-year international expansion roadmap to secure new overseas generation capacity. TNB will bring significant engineering and technical expertise, not least in the areas of managing, operating and maintaining large scale power plants.

“This know-how will give the partnership between TNB, GAMA Holding, IFC and GIF, a real competitive edge that can maximise opportunities in Turkey and the region,” he said.

TNB’s equity investment in GAMA Enerji will result in a strategic partnership that will allow it to pursue regional expansion opportunities, in terms of asset acquisitions, greenfield projects, portfolio optimisation and supply market entry.

The group will also form a separate partnership with GAMA Holding, to jointly offer Operations & Maintenance (O&M) facilities services regionally.

This will allow TNB to pursue untapped opportunities in the region’s O&M sector, as well as leverage on GAMA Holding’s regional leadership in EPC services, it said.

The process of acquiring GAMA Enerji began in December 2014 and was completed after careful and detailed due diligence by TNB and its financial advisors, Unlu & Co A.S and UBS AG.

The SSA was signed on Dec 11, 2015. The investment, which will be financed by a combination of internal funds and external debt, is subject to obtaining regulatory approvals from the Turkish Competition Board, Turkey’s Energy Market Regulatory Authority and relevant Malaysian regulatory authorities.

The proposed acquisition is expected to be completed by the first quarter of calendar year 2016.

TNB shares closed down 10 sen or 0.76% today to RM13.04, arriving at a market capitalisation of RM73.59 billion.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)
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