TNB takes control of UK’s Vortex Solar

by FARA AISYAH / pic by ARIF KARTONO

TENAGA Nasional Bhd (TNB) has gained the majority control of UK’s Vortex Solar Investments Sarl by completing the acquisition of a 5% controlling equity in the company for £11 million (RM59.07 million).

The acquisition — done via its wholly-owned subsidiary, TNB International Sdn Bhd — will increase TNB’s equity interest in Vortex Solar to 55%.

TNB president and CEO Datuk Seri Amir Hamzah Azizan said the acquisition is a key milestone in the group’s commitment to reduce its carbon footprint and grow its international renewable energy (RE) business portfolio, in line with its energy transition aspiration of becoming the leading provider of sustainable energy solutions both domestically and internationally.

“With the acquisition, TNB now has majority control of Vortex Solar, thereby further strengthening the group’s international European RE business footprint where TNB already wholly owns Tenaga Wind Ventures UK Ltd (TWV), the largest Feed-in-Tariff wind portfolio in the UK.

“This acquisition forms part of TNB’s new strategy of growing our RE businesses in the UK and Europe and is a deliberate move to take control of our high performing RE assets, beginning with the acquisition of 100% in TWV earlier this year,” he said in a statement yesterday.

By leveraging on TNB’s existing capabilities and its control of TWV and Vortex Solar, Amir Hamzah said TNB will continue to expand in the region in line with its international RE growth strategy through the restructuring of Vortex Solar and TWV into a Renewable Asset Company aimed at owning, operating and managing a portfolio of RE assets in the UK and Europe.

The utility company first acquired a 50% equity stake of Vortex Solar in 2017 for £86 million.

The portfolio has performed positively contributing £39.1 million Ebitda in 2019.

It has also shown growth from 80% Ebitda margin in 2018 to 84% Ebitda margin in 2019.

In March, TNB via TWV has fully acquired two UK-based RE companies in a bid to grow the utility company’s RE business. It bought the balance of 20% interest in GVO Wind Ltd and Bluemerang Capital Ltd for £18.6 million cash.

With the acquisition, TNB now holds 100% asset ownership and control over the two companies and their respective assets via TWV.

Amir Hamzah said the initial purchase of 80% interest in the firms has contributed positively to TNB’s financials and strategic objectives.

The assets performed positively, contributing RM76 million in Ebitda in 2019, and growing from a 62% Ebitda margin at acquisition to a 74% Ebitda margin in 2019.

In March 2018, TNB said it had purchased an 80% stake in GVO Wind and Bluemerang Capital for an enterprise value of approximately £171 million.

TNB’s earnings are expected to rebound in the second half of 2020 after the utility group posted a 41.5% drop in the second quarter (2Q) net profit due to higher tax expenses and weaker electricity sales.

TNB recorded a net profit of RM653.3 million in the 2Q ended June 30, 2020, versus RM1.12 billion last year.

Revenue slid 15.5% to RM10.89 billion from RM12.88 billion the year before, as business activities slowed amid Malaysia’s pandemic containment measures.

The counter closed four sen or 0.36% higher to RM11.04 yesterday, with a market capitalisation of RM62.98 billion.