Jewel magnates’ Alinta sale is a gift to Sembcorp

Sembcorp Industries

12/12/2025 04:09

The author is a Reuters Breakingviews columnist.  The opinions expressed are his own. Updates to add graphic.

By Ka Sing Chan

HONG KONG, Dec 12 (Reuters Breakingviews) - Temasek is no stranger to blockbuster deals with Hong Kong tycoons. Sembcorp Industries SCIL.SI, backed by the Singaporean state investor, is buying gas and electricity provider Alinta from the Cheng family's Chow Tai Fook Enterprises for A$6.5 billion ($4.33 billion) including debt. The clan behind jeweller of the same name could use the cash to bolster its troubled property firm, New World Development 0017.HK. For the buyer, the modest price tag limits the risks of a chunky acquisition one-third the size of its own enterprise value.

The $8 billion Sembcorp is making a bold entry into Australia by taking control of an energy firm boasting 3.4 gigawatts of installed and contracted generation assets serving over 1.1 million customers. At a multiple of 11.6 times its trailing price to earnings, Alinta is changing hands at a discount to its rival Origin Energy ORG.AX on 15 times whose investors rejected a $11 billion bid from Brookfield in 2023. Sembcorp shares rose nearly 2% on Friday, the morning after the deal was announced.

The seller bought Alinta in 2017 for what was then $3 billion and its prey went on to acquire the 1,200-megawatt Loy Yang coal plant for A$1.2 billion, currently about $800 million, in the same year. That implies limited upside for Chow Tai Fook on its acquisition despite 11% annual growth in Alinta's adjusted EBITDA since 2022. Yet the buyer may be more focused on what it can do with the proceeds.

     These amount to 1.9 times the market value of New World. The developer is sitting on about $20 billion worth of borrowings, of which $8.8 billion will mature by 2028. It is under pressure from banks to cut debt after pulling off a three-year, $11 billion refinancing deal earlier this year. Its controlling shareholder may need to step in if Hong Kong's property market doesn't start to show a meaningful recovery from a slump that began in 2020.

The Cheng's deals may keep coming. They are also seeking buyers for properties held under the family’s Rosewood hotel brand. Citing people familiar with the deal, Bloomberg reported in August that CapitaLand - another of the Singapore investor's portfolio companies - was in talks over a plan to inject funds into New World. Temasek may emerge to play a bigger role in the family's overhaul of its assets.

CONTEXT NEWS

      Sembcorp Industries said on December 11 that it would acquire Australian gas and electricity provider Alinta Energy for A$6.5 billion ($4.3 billion) including debt. The deal is expected to close in the first half of 2026, subject to Sembcorp shareholder approval.

Chow Tai Fook Enterprises, the seller, is the flagship private investment holding company of Hong Kong's Cheng family and the major shareholder of property conglomerate New World Development. It bought Alinta for A$4 billion in 2017 and the company went on to make further acquisitions.

Alinta operates 3.4 gigawatts of installed and contracted generation assets and serves 1.1 million customers in Australia. It generated adjusted EBITDA of A$987 million and net profit of A$483 million in the year ended June 2025.

Following the announcement, Sembcorp shares rose 1.4% to S$5.9 on December 12.

Sembcorp Alinta deal has boosted its share price https://www.reuters.com/graphics/BRV-BRV/mypmqjgydpr/chart.png

(Editing by Una Galani; Production by Aditya Srivastav)

((For previous columns by the author, Reuters customers can click on CHAN/ KaSing.Chan@thomsonreuters.com))