GPSC buys 69.11% of Glow from Engie SA
Deal aimed at adapting to Thai power industry
Global Power Synergy (GPSC) has signed a share purchase agreement to acquire a 69.11% stake in Glow Energy Plc from French giant Engie SA for almost 100 billion baht as it positions itself for the transition in Thailand’s power market.
GPSC, the power and utilities arm of PTT Plc, is still uncertain whether the firm’s core businesses, fossil fuels, renewable energy and energy storage, will be separated or combined into a single firm.
Reorganisation questions remain after GPSC tripled its generating capacity by acquiring the stake in Glow.
The share purchase agreement is for a price of 96.5 baht per share, and subsequent tender of the remaining shares.
The transaction, valued at 97.56 billion baht, is expected to be completed this year and is projected to help the company benefit from Glow’s high-quality assets, leverage potential business opportunities and increase its market presence nationwide.
A source from PTT who requested anonymity said GPSC’s long-term business plan will be determined after the share purchase was completed.
GPSC’s total current generating capacity is 1,940 megawatts of electricity, 1,585 tonnes per hour of steam, 12,000 tonnes of refrigerated water and 2,080 cubic metres per hour of processed water.
The merger with Glow will triple its combined capacity to 4,835MW from 1,530MW, which will make it Thailand’s largest private power producer.
Electricity Generating Plc (Egco) is second with capacity of 4,260MW.
Egco is an affiliate of a subsidiary of the Electricity Generating Authority of Thailand (Egat), a wholly owned state entity.
“It is not yet certain whether [the company’s core businesses will be separated or combined into a single firm]. The process is still in the early stages, and depends on GPSC’s internal discussions and planning,” said the source.
The plan will be initiated after the share purchase and tender offer is completed. There have been no discussions about cutting staff numbers.
After this deal, GPSC plans to prepare for the upcoming power market transition in Thailand, in line with the reform scheme of the National Reform Steering committee, which finalised the plan last December.
The plan will integrate renewable energy in the power generation system through a smart grid, or by selling power under a business-to-business model, instead of under the existing enhanced single buyer scheme, in which Egat is the sole participant.
The reform will also encourage private firms like Banpu Plc (through its wholly owned Banpu Infinergy Co) and BCPG Plc (through its collaboration with Australiabased Power Ledger) to enter this sector.
Earlier this year GPSC spent 2 billion baht on a pilot smart grid project in Pathum Thani’s Nava Nakorn Industrial Zone, which will sell power from solar rooftops under the peer-to-peer model.
GPSC will also gain significant operational synergy from synchronising the existing infrastructure platform to ensure efficiency and system optimisation for future sustainable growth at the regional level, said the company.
Toemchai Bunnag, president and chief executive of GPSC, said its board of directors approved the purchase yesterday.
“The acquisition of Glow is an opportunity for GPSC to immediately expand its effective power production capacity to 4,835MW,” said Mr Toemchai.
“This acquisition will enlarge our industrial customer base, in addition to those of PTT Group and the Electricity Generating Authority of Thailand, which aligns with our strategic growth plan driven by a larger SPP [small power producer] portfolio.”
With the combined portfolio and established infrastructure located adjacent, the company expects to achieve operational synergy driven by better load management and utilise shared resources to improve operational efficiency, leading to cost reductions and improved reliability of power and steam distribution.
GPSC plans to fund the acquisition and tender offer with a bridge loan from financial institutions and/or major shareholders, said the company’s public release.
GPSC is considering issuing corporate bonds and/or long-term loans from leading financial institutions for about half of the bridge loan. The remaining portion will be funded by equity issuance.
GPSC shares are held by PTT (22.6%), PTT Global Chemical (22.7%), Thai Oil (8.9%), Thai Oil Power (20.8%), and public investors (25%).