Edra Global Energy Global Berhad to be sold to a consortium

Reported in Bloomberg dated 21 November 2015. Edra Global Energy (Edra) may be sold  soon, to an international consortium. Yes, this international consortium has submitted a higher bid than our own Tenaga. Maybe it’s a good news for Tenaga since their shares were dumped when it was revealed that they were submitting a bid. Never mind that the asset they are trying to buy is related to power generation and Tenaga IS an energy related listed entity. Anyway, I hope those who kept 1MDB on  defensive mode is now happy. I think everything that has been blamed on one company including the economy, the Ringgit and even potential bankruptcy is going to clear soon.
As per the report, 1Malaysia Development Bhd (1MDB) will be finalising an agreement to sell Edra to a Chinese-led consortium. They include China General Nuclear Power Corp and Qatar’s Nebras Power QSC. Era is said to be valued at about RM10 billion which is higher than what Tenaga was bidding for. Oh yeah, part of the reason for this higher bidding is also because of the weaker Ringgit which coincidentally was supposedly caused significantly by 1MDB in the first place. Government approval would be needed for this deal to go through because China General Nuclear consortium wants to own at least 50 percent of the business while the current regulation is that foreign investors may only own as much as 49 percent of Malaysian power producers. This is due to the current subsidy structure for electricity plants.
This piece of news has however not been confirmed by any of the parties above and 1MDB said that it will not comment on any deal which has not yet been finalised. Where power plants are concerned, as per 1MDB’s website, it owns a net generation capacity of 5,594 MW and is the largest independent power producer in Bangladesh and Egypt. Besides investments in plants in Pakistan and the United Arab Emirates, it is also Malaysia’s second biggest independent power producer, second only to Malakoff.
I would prefer for Malaysian owned companies to own power generating plants in other countries and not the other way around. With growing economies, all countries need to use ever increasing power and thus these power generating assets are going to be worth more with time. I do not know any country in this world that has an ever cheaper electricity rates. Certainly not within Europe and definitely not within ASIA where majority of the countries are still growing much faster than the western world. However, I would have to vote for a better sentiment and thus perhaps this salami be a necessity. We can always look for other opportunities in future but I hope it’s not through 1MDB. It’s time to move on. Happy anticipating.
written on 22 Nov 2015
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