Serial article regarding M&A on NNA (vol.108)

In this article, we take a M&A deal of an onshore wind portfolio in the UK by a subsidiary of Tenaga Nasional Bhd., which is a leading Malaysian electricity and electric utility company, announced in 2022. And let’s look at the current situation of renewable energy in Malaysia. 

Tenaga Nasional Bhd. (TNB) announced on 4th April 2022 that Vantage RE Ltd., which is TNB’s subsidiary acquired 100% stake of onshore wind portfolio in the UK from a number of funds managed by Capital Dynamics, which is an independent private asset management firm and one of the world’s leading clean energy investors. 

TNB is the largest Malaysian electricity and electric utility company whose head shareholder is a governmental fund, Khazanah Nasional, and its sales reaches MYR 53 billion and its market capital is MYR 55 billion. TNB has already invested in renewable energy portfolios not only in Malaysia but also in the UK, Kuwait, Turkey and India etc., and they are aiming to invest around MYR 20 billion per year as capital investment to achieve “NET ZERO 2050”, which means to achieve virtually zero greenhouse gas emissions by 20501.  

Vantage RE, a wholly owned subsidiary of TNB with its headquarter in the UK,  owns, operates and manages renewable energy projects of solar, onshore and offshore wind.  

Vantage RE acquired 100% stake of 97.3MW onshore wind portfolio in GBP 145.9 million, equivalent to MYR 800 million. According to TNB’s press release on 4th April 2022, upon to this completion of this acquisition, Vantage RE’s total operational renewable energy capacity will grow to 530MW, and this can be a crucial milestone to enhance TNB’s presence in onshore wind field which is core of the growing market2

Renewable energy in Malaysia mainly consists of solar, biomass & biogas and hydro power. At this moment, solar generates more than 50% of the total of renewable energy. Since Malaysia has highlands, numerous rivers and abundant biomass, it is also expected to grow in the field of hydro, biomass and biogas3

In Malaysia, Sustainable Energy Development Authority was established in 2011, and the government implements policies and supports for promoting renewable energy. The government aims to increase the percentage of renewable energy from 8% as of 2019 to 20% by 2025 (Compared to the global standard, 19.9% in Europe, 18% in Japan, 25.5% in China, and 16.8% in the US as of 20194.).  

Since Malaysia is an oil & gas producing country, electric vehicles are not widely used in the country and the power generation heavily depends on fossil fuels, however, many companies such as TNB and Petronas, which is a government-managed oil & gas company, are showing their willingness to decarbonize their business.  

Speaking of the Japanese companies’ activities in the field of renewable energy in Malaysia, Idemitsu Kosan released on 20th July 2022 that they would install solar power generation system on the roof of the University of Reading of the EduCity Complex in Johor, and start electricity providing business. Now that the government is on the halfway of their goal, we can say that there must be great business opportunities for foreign companies in this field as well. 

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