Published on 24 Feb 2022

Sunseap to shelve IPO plans after S$1.1b buyout: Temasek sold all 12% of its stake

EDP Renewables’ acquisition meant that its early investors have relinquished their entire stake in the company. Phuan and his fellow co-founder NBS alumnus Lawrence Wu now hold a 7 percent stake – about half of what they owned before the acquisition

SUNSEAP Group will put on hold plans to be listed on the Singapore Exchange (SGX), its chief executive officer (CEO) said after concluding the sale of a 91 per cent stake to EDP Renewables (EDPR) for S$1.1 billion on Thursday (Feb 24).

Frank Phuan, also co-founder of the Singapore renewable energy company, confirmed as well that EDPR's acquisition meant that its early investors, including state investor Temasek, which owned 12 per cent of Sunseap, have relinquished their entire stake in the company.

Phuan and his fellow co-founder Lawrence Wu now hold a 7 per cent stake – about half of what they owned before the acquisition – while its Japanese investors, including Sumitomo Corporation, retained 2 per cent holdings in the company.

Phuan revealed these to The Business Times on the sidelines of a press conference at the Marina Bay Sands Convention Centre on Thursday, where EDPR and Sunseap held a deal-closing ceremony.

At the ceremony, EDPR, the world's fourth-largest renewable energy producer, presented plans to invest S$10 billion by 2030 to establish its Asia-Pacific headquarters in Singapore through Sunseap. The move is expected to create more than 750 green jobs in the region.

Asked why Sunseap is shelving initial public offering (IPO) plans, Phuan said it is because fundraising "can take the backseat" now that EDPR is a majority shareholder.

"We want everyone to understand the whole idea of tapping on the capital markets was to do more projects," he added. "And that was also due to the nature of the beast – because the way we conduct business, where we invest into green infrastructure and have recurring revenue, requires a heavy amount of capital expenditure and funds to come in year on year."

With EDPR's involvement, much of the funds required for its upcoming projects will come from the Madrid-headquartered company, which is listed on Portugal's Euronext Lisbon, he pointed out.

Nevertheless, Phuan said he won't rule out the possibility of Sunseap being listed "somewhere in the future", since EDPR and its parent company Energias de Portugal (EDP) are listed entities.

Miguel Stilwell d'Andrade, chief executive officer of EDP and EDPR, took questions at the press conference as well.

On the exit of Sunseap's early investors, which also include Shell Ventures and Thai energy giant Banpu, he said: "We are long-term strategic investors. This is our business. This is what we do. We invest in renewable energies, we invest in energy transition, and we have been doing this for a long time, and we want to do this going forward, so we are not a pure financial investor.

"We are here not just to get in itself. We are here for the long run, the next decades... In terms of shareholder structure, we are coming in and maybe taking the place of other shareholders, and that's because we have a common view."

Adding that it is part of the "normal evolution of companies" that shareholders sometimes get substituted by others, he said: "In this case, clearly, the good thing about this is that we are joining forces, and combined, I think we can do a lot more."

In a joint press statement, the 2 companies said the plans to set up a Singapore headquarters are in line with EDPR's strategy for the region, which it identified as the world's fastest-growing renewables market. The region accounted for 55 per cent of global capacity additions this decade, with solar representing 65 per cent of the growth, they noted.

Together, the companies will embark on renewable energy projects across the Asia-Pacific region, specifically solar and wind projects, they pointed out. There will also be opportunities for cooperation in energy storage and green hydrogen, among others, they said.

Sunseap's founders will be part of the region's top management team that will lead the business, as EDPR intends to tap their regional knowledge and strong distribution generation track record, they added.

Currently, EDPR has access to markets with growth in renewables of over 120 gigawatts a year, a figure that represents approximately 75 per cent of the expected global growth between 2020 and 2030.

Sunseap has a pipeline of close to 10 gigawatt alternate current of solar energy projects across Asia, and its solar energy systems are used in more than 3,000 buildings in Singapore, including in public housing estates.

Source: The Business Times