Exclusive: Malaysia’s Tenaga plans $1 billion IPO for its energy business

SINGAPORE, Aug 12 (Reuters) – Malaysian power utility Tenaga Nasional Bhd (TENA.KL) plans to begin the process next year for a potential $1 billion listing of its power generation business. electricity, sources familiar with the matter told Reuters.

In what would be the country’s largest initial public offering (IPO) in a decade, TNB Power Generation Sdn Bhd, known as TNB Genco, could be valued at around $4 billion, the sources said, declining to comment. be named due to the confidential nature of the matter.

Proceeds from the offering will be used to expand TNB Genco’s renewable energy portfolio, they added.

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Tenaga, which counts Malaysian sovereign wealth fund Khazanah Nasional Bhd as its largest shareholder, said the company had explored various initiatives to increase shareholder value, including a possible listing of TNB Genco.

However, Tenaga has not made a “final decision on these potential initiatives” and is currently focused on improving operational performance, the company said in response to a Reuters request for comment.

TNB Genco’s IPO plan comes as Malaysia’s economy grew at its fastest annual pace in the second quarter, boosted by expanding domestic demand and resilient exports. The economy has seen a strong recovery since the reopening of its borders in April.

The IPO, if it materializes, would be Malaysia’s largest since the IPO of pay-TV company Astro Malaysia Holdings Bhd (ASTR.KL) in 2012. The amount raised from Malaysian IPOs has rose 37% to $570 million so far this year, according to Refinitiv Data.

CLEAN ENERGY

Tenaga aims to transform TNB Genco into a greener energy generator as part of its ambition to grab a bigger share of the clean energy market, its president and CEO said. Baharin Din, in a statement on August 2.

The clean energy market is estimated to be between 65 billion ringgit ($14.64 billion) and 80 billion ringgit in Malaysia by 2050, and Tenaga is aiming for TNB Genco to take 40 billion ringgit of it, a he added.

The company will seek to decommission some coal-fired power plants and seek potential collaboration with technology partners to further develop hydrogen as a clean and viable energy source, Baharin said.

Tenaga incorporated TNB Genco as a separate unit in August 2019 to support its production assets and liabilities as part of its group-wide transformation plan. TNB Genco states on its website that it holds 54.3% of the power generation market in Malaysia.

TNB Genco began operations in October 2020 and has 10 thermal power plants, three hydroelectric projects, two large solar farms and a port in Malaysia, according to its website. Its generation assets have a total capacity of 15,882 megawatts.

Its activities also include operation and maintenance, repair and overhaul for the energy-related industry.

($1 = 4.4410 ringgit)

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Reporting by Yantoultra Ngui; edited by Sumeet Chatterjee, David Goodman and Jason Neely

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