First Pacific Co. Ltd. of Hong Kong and Manila Electric Company of the Philippines have created a joint venture vehicle – FPM Power Holdings – to acquire a majority interest in a new 771-megawatt, LNG-fueled power plant in Singapore. The plant, located on Jurong Island, is slated to begin commercial operations in December and will supply electricity to the Singapore grid.
FPM is acquiring a 70% interest in the plant for US$537 million. The remaining 30% interest will be owned by Petronas International Corp of Malaysia.
The buyers, motivated by a strategic objective to expand in Southeast Asia, purchased the asset from GMR Infrastructure Limited of India, and its subsidiary GMR Infrastructure (Singapore) Pte. Limited, which are looking to re-focus resources on their core domestic Indian businesses. The asset is viewed as a strategic investment that benefits from Singapore’s predictable regulatory environment and rapidly growing economy, said a spokesman for Milbank, Tweed, Hadley & McCloy, which represented First Pacific, Manila Electric, and FPM on the innovative transaction.
The project finance lenders, a group of international and regional banks that advanced US$815 million in financing to the project in 2011, approved the transaction in record time as the new sponsors are considered successful, technically capable, and well-capitalized companies. The lender group includes Standard Chartered Bank, Singapore Branch, Axis Bank Limited, Singapore Branch, CIMB Bank Berhad, KfW, National Australia Bank Limited, and Portigon AG (formerly known as West LB AG, Singapore Branch).
The Milbank deal team was led by the head of the project finance group in Asia, partner Gary Wigmore, and included counsel Desiree Woo along with associates Andrew Compton, Nicholas Atwood, and trainee solicitor Parinna Lau. Global corporate partner Stuart Harray and associate Mark Withey, both based in London, also advised on the deal.
In commenting on the transaction, Wigmore said, “We’re thrilled to have been able to complete such an interesting deal that involved the piecing together of a core M&A transaction with a construction phase project financing, which is rarely done. We are grateful to our clients for the opportunity to work on such an exciting transaction.”
White & Case acted as legal counsel to GMR Infrastructure Limited. Norton Rose served as counsel to the project finance lender group, and Allen & Gledhill acted as local Singapore counsel to the buyer group.