Sembcorp Industries to launch Indian IPO

It will sell utilities assets that are expected to yield $500m, adding to the proceeds of the IPO.

Sembcorp Industries is preparing for an initial public offering (IPO) of Sembcorp Energy India Limited (SEIL) on BSE Limited and the National Stock Exchange of India (NSE), with the filing of a draft red herring prospectus.

According to a press release, following the review of its Utilities business, the SCI is planning to divest a number of peripheral utilities assets. Over the next two years, this is expected to deliver estimated cash proceeds of up to $500m. This is additional to potential proceeds from the proposed IPO of Sembcorp Energy India Limited (SEIL).

The company also announced that it had entered into a conditional agreement to divest its municipal water operations in South Africa, as part of its geographical repositioning. “The Group’s focus on active and systematic capital recycling will enable it to strengthen its balance sheet and deliver sustainable growth,” the company said.

The Group currently has an effective stake of 93.73% in SEIL, formerly known as Thermal Powertech Corporation India (TPCIL). SEIL owns the group’s entire portfolio of thermal and renewable energy businesses located in India, including 100% of Sembcorp Gayatri Power (SGPL), as well as 100% of Sembcorp Green Infra (SGIL). 

This represents assets with a combined capacity of 4.07 gigawatts as of December 31, 2017, to which an additional 300-megawatt wind energy project was added pursuant to a successful bid in a reverse auction conducted by the Solar Energy Corporation of India in February 2018.

SCI had a rocky 2017 after its profit crashed 84.6% YoY to $22.8m in 4Q2017 and 41.6% YoY to $230.8m for the full-year. Results were dragged by poorer performance in marine and one-off items in utilities.