Singha Estate Public Company Limited (S), a leading Thai property investment and development company, on March 23, 2021, announced that it has secured the exclusive rights to acquire a 30% shareholding in three major co-generation power plants with total capacity of 400 megawatts, at par value, and with a total investment of 1,392 million baht.
The first of the plants is an operational 123 megawatt combined cycle co-generation power plant that is owned and operated by Angthong Power Company Limited and located in the ‘World Food Valley’ industrial estate in Ang Thong, Central Thailand.
The second and third plants, each with 140 MW capacity, are greenfield operations that are currently under construction and will enter into service in 2023. They are also located in the ‘World Food Valley’ industrial estate. The licences for these power plants are owned by B.Grimm Power (Ratchaburi) 1 Limited and B.Grimm Power (Ratchaburi) 2 Limited.
The three acquisitions are subject to S’s shareholders’ approval at its Annual General Meeting on 23 April 2021.
Mr. Chutinant Bhirombhakdi, Chairman of the Board of Directors of S, said, “We have secured these rights under very attractive terms. They are an important part of the jigsaw that will make Singha Estate into one of Thailand’s foremost property, power generation, and engineering services companies, while tripling the size of our business to Bht 20,000 million in revenues in three years.”
S recently announced that 2021 is a transition year for the company in which it is moving into the next phase of its development by embracing businesses that complement its three core property businesses that are commercial property, residential property, and resorts and hotels.
“We want a business that can become huge, combining steady, consistent returns with exciting growth opportunities. We will leverage the synergies between our four business platforms to give us great competitive strength,” Mr. Bhirombhakdi said.
Mrs. Thitima Rungkwansiriroj, Chief Executive Officer, Singha Estate PCL, said, “Licences for power generation plants of this size are a very rare commodity, so we are especially pleased to have secured rights to a substantial stake in three important power plants. They will give us an immediate and sure-footed presence in this sector.”
“Our options are made particularly attractive by the fact that 270 MW, or close to 70% of the combined output of the three power plants, is already pre-sold at guaranteed prices. This assures us sustainable recurring revenues that will enhance the resilience of our business,” she added.
According to Mrs. Rungkwansiriroj, Angthong Power is the only power plant in Thailand that is profitable even without the need to sell to independent users and that 75% of its output is taken up through a 25-year power purchase agreement with the Electricity Generating Authority of Thailand. She noted that “the use of advanced technology has reduced costs and further improved the margins of the business beyond initial estimates.”
The three power plants are expected to generate 7,500 million baht in revenues in 2024.
“Apart from the synergy benefits that we foresee from these acquisitions, their returns as stand-alone businesses are also attractive. We have a draw-down facility with banks so that Singha Estate only needs to put up minimal capital, and at the tail end under a ‘back-end equity’ arrangement,” Mrs. Rungkwansiriroj said.
S has a low net debt-to-equity ratio of 0.96 and access to 25 billion baht in credit facilities.