What is certain is that the proposed acquisition will increase Sembcorp Industries’ carbon emissions, as Alinta’s operating asset is a coal-fired power plant in Victoria. Alinta’s generating capacity comprises 3.4GW of installed and contracted generation assets. These include 1.5GW gas, 1.1GW coal, 583MW of wind and solar farms, and 214MW of wind farms. It is currently developing a 400MW battery energy storage system (BESS) and has 1.8GW of onshore wind, gas firming and BESS projects under development. In addition to increasing Sembcorp’s brown assets, the proposed acquisition is likely to destroy balance-sheet value despite being earnings-accretive on a pro forma basis.
At first glance, Sembcorp Industries’ announcement to acquire Alinta Energy at an enterprise value of A$6.5 billion ($5.6 billion) has elicited scathing remarks from the Australian media. According to The Australian, KKR had valued Alinta for A$4 billion to A$4.5 billion.
Australian media have noted that none of Alinta’s suitors were willing to pay more than that amount. However, a spokesperson for Sembcorp says those A$4.5 billion offers excluded Loy Yang B, Alinta’s main asset, a coal-fired plant.
