Malaysian utility giant continues acquisitions with UK-based Vortex Solar

The latest purchase signals the group’s third global acquisition in just over 12 months.
Before this, TNB had embarked on two notable overseas investments – 30 per cent stake in GAMA Enerji, Turkey, for US$243 million (Bt8.6 billion) in December 2015, and a 30 per cent stake in GMR Energy for $300 million in May 2016.
The energy giant explained that these acquisitions were part of its five-year expansion road map to secure new overseas generation capacity, including renewable energy (RE). Last week, TNB announced that it was buying a 50 per cent stake in Vortex Solar for ฃ86 million (Bt3.7 billion) cash.
The purchase would enable it to have a stake in the company, which holds certain interests in solar photovoltaic (PV) project companies that own and operate solar PV projects in the UK with a combined net installed capacity of about 365 megawatts.
So, what is TNB’s gameplan? Is it too late for TNB to join the RE bandwagon now?
According to analysts, TNB’s shopping spree was in line with its plan to have international investments amounting to 20 per cent of its earnings by 2025.
As of now, TNB’s overseas investments are relatively small to significantly sway its earnings, but may become more important going forward. Its long-term growth will depend on how fast it can expand in markets abroad such as Turkey and India, which have more power demand than Malaysia.
TNB’s Malaysian business remains its bread-and-butter operations.
For the financial year ended Aug 31, 2016 (FY16), TNB posted a net profit of RM7.36 billion on a revenue of RM44.53 billion. In the same period, its non-regulated business contributed about RM3bil to its revenue. This amount has been increasing steadily from RM2.3 billion in FY12
“We believe the latest acquisition will expand and complement its existing business,” an analyst says.
Another analyst points out that RE is getting stronger, and becoming a prominent component of our energy infrastructure. 
One reason for the increasing popularity of green energy is that it is becoming cheaper to produce. Various reports have indicated that the installed price of solar energy has declined significantly in recent years, as policy and market forces have driven more and more solar installations.
“The amount for the acquisition of Vortex Solar is relatively a small amount compared with TNB’s asset base and also a small amount in terms of generation capacity.