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1 INTERNATIONAL POWER SUMMIT ROME 2017 SURIATI ASMAH ABDULLAH TENAGA NASIONAL BERHAD
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INTERNATIONAL POWER SUMMIT
ROME 2017
SURIATI ASMAH ABDULLAH
TENAGA NASIONAL BERHAD
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Capital: Kuala Lumpur
Official Language: Malay
Business Language(s): English
Demography: Multiracial
Population
Total Population: 30,331,007
Natural Increase: 1.4%
Density: 92 Inhabitants/km²
Urban Population: 74.7%
Country Overview
Area: 330,800 km²
Type of State: Federal state with
constitutional elective monarchy.
13 states which enjoy a fair amount
of federal decentralization.
Type of Economy: Upper-middle-
income economy, Emerging
Financial Market. A country
specialised in the export of
electronic goods and components.
Malaysia
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Tenaga Nasional Berhad
KLSE:Kuala Lumpur Stock Exchange
No 2 Power
utility in Asia (Platts)
#1 Largest
company on KLSE
Global footprint in
10 countries
Datuk Seri Ir. Azman Mohd President / CEO
PENINSULAR MALAYSIA SABAH
SARAWAK
INSTALLED CAPACITY
>12 GW
> 50%
MARKET CAPITALISATION
>RM80 BILLION
(USD 22 BILLION)
TRANSMISSION LINE
21,000 KM
NATIONAL GRID
CURRENT GLOBAL PRESENCE
SOUTH EAST ASIA
MIDDLE EAST
TURKEY
INDIA SUBCONTINENT
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Tenaga Nasional Berhad – Thermal Plants
1. GELUGOR
1X330 MW CCGT
2. PRAI
1,070MW CCGT
3. JANAMANJUNG
3X690 MW COAL
4. MANJUNG 4
1,000 MW COAL
Penang
Perak
5. PAKA
3X290 MW CCGT
1X 266 MW CCGT
Terengganu
10 Thermal Power Plants
Capacity:11,332MW
8. KAPAR ENERGY VENTURES
(60%)
2X500 MW COAL
2X 300 MW COAL
2X300 M GAS
2X110 MW CCGT
6. CONNAUGHT BRIDGE
1X337 MW CCGT
4X 129 MW CCGT
7. CBPS
385 MW CCGT
9. TUANKU JAAFAR
1X755 MW CCGT
1X 694 MW CCGT
10. PASIR GUDANG
1X269 MW CCGT
1X 110 MW OCGT
2X120 MW GAS (THERMAL)
Selangor
Negeri Sembilan
Johor
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1. SG.PERAK
1,220MW HYDRO
2. KENYIR
400MW HYDRO
3. HULU TERENGGANU
265MW HYDRO
4. ULU JELAI
372MW HYDRO
5. CAMERON HIGHLANDS
250 MW HYDRO
5 Hydro Power Plants
Capacity:2,507 MW
Perak
Terengganu
Pahang
Tenaga Nasional Berhad – Hydro Plants
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3. TEKAI
156 MW HYDRO
1. MANJUNG 5
1000 MW COAL
2. NEGGIRI
300 MW HYDRO
4. JIMAH EAST
2 X1000 MW COAL
4 NEW Projects
Capacity: 3,546 MW
Negeri Sembilan
Kelantan
Perak
Tenaga Nasional Berhad – Projects under development
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TNB aspires to become a strong leader at home whilst
growing as a regional champion
Power
generation
Transmission
Distribution
TNB market share
Percent
60%
100%
100%
RM60 billion in revenues by 2025
RM 7 billion net earnings
Target in 7 countries
Aim RM 10-20 billion in revenues
by 2025
15-30% of total Group net earnings
1 Assuming tariff increase of 3% every 5 years and no fuel inflation
Strong Domestic Leader Regional Champion
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TNB’s International Portfolio –
We have established a name for ourselves in the region, making TNB one of the largest electricity
companies in Asia as we transform ourselves from a Domestic to a Global Champion
BRUNEI • MTM supply of transformers to Brunei
• Acquisition of 30% stake in India’s GMR Energy
Ltd (2828 MW)
TURKEY SAUDI ARABIA
KUWAIT
PAKISTAN
UNITED ARAB
EMIRATES
• Acquisition of 30% stake in Gama Enerji A.S.
(1088 MW)
• MTM supply of transformers to Saudi Arabia.
• TNB Owned 6% shares in Shuaibah Independent
Water & Power Project (IWPP): 900MW Power
880,000 m3 / day water 150,000 m3 / day water
• REMACO O&M Services for Shuaibah IWPP
• REMACO O&M for Shuaibah North Co-Gen:
780MW Power; 204,000m3 per day water
• Sabiya Open Cycle 6 x LM6000
• Doha West Open Cycle 5 x LM6000
• IPP: Liberty Power Ltd 235MW
• REMACO O&M Services for Hydro Plant in
Pakistan
• REMACO O&M Services for HUBCO (Narowal)
• REMACO O&M Services for Liberty Power Ltd
• TSG supply of switchgears to Pakistan • TNEC JV with Abu Dhabi Al Samah for District
Cooling
• TNEC JV Al Reef District Cooling, UAE 8,000 RT
• TNEC JV BMC District Cooling, UAE 30,000 RT
INDONESIA • MTM supply of transformers to Indonesia
• TSG supply of switchgears & services to
Indonesia
VIETNAM • TSG Supply of switchgears to Vietnam
THAILAND • TSG supply of services to Thailand
INDIA
UNITED
KINGDOM • Acquisition of 50% stake in a 365MW
Solar Portfolio
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Today’s Content
Mergers & acquisition overview
Rationale and Motives for M&A
M&A Process
Due diligence planning & preparation
Due diligence execution
Translating due diligence findings into
actions
Conclusion: Key success factors
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Rationale and Motives for M&A
Strategic resources ▪ Acquire strategic resources such as know how, brands,
technology
New markets ▪ Tap new markets or customers or sustain existing
markets
Natural resources ▪ Secure access to natural resources such as raw
materials and energy
Synergy & Efficiency ▪ Improve efficiency by accessing production assets, e.g.
cheap labour , economies of scale, integration of
systems and infrastructure,
Increase Shareholder Value ▪ To acquire a company with the intention to create
shareholder value over and above that of the sum of the
two companies
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M&A Process – Lengthy and Complex
Strategy Setting Market
Scanning Preliminary Assessment
Due Diligence
Deal Closing Integration
• Set growth
strategy
• Set growth
target
• Explore
strategy
execution
− Build
− Acquire
− JV
• Scan market for
opportunities
− Core
− Adjacent
− Step out
• Set Investment
thesis
− Market
expansion
− Vertical
integration
− New product/
technology
• Identify
potential targets
• Identify
acquisition
method
• Implementation of
post-deal
activities
• Post-deal
management and
monitoring of
acquired asset
• Finalizing
valuation and
purchase price
• Negotiating
and finalizing
definitive
agreements
• Financial close/
payment
• Planning &
Preparation
• Due Diligence
Execution
• Acting on due
diligence
findings
• ‘Go’ or ‘No Go’
Decision
• Study strategic
fit
• Assess
availability of
target
• Preliminary risk
assessment
− Country
− Market
− Partner
− Project/ Deal
• Resource
capability study
− Financial
− Manpower
− Time
Acquisition risks occur at every stage of the M&A process e.g.
- Over paying for the assets
- Inaccurate assumptions of future operating parameters
- Poor understanding of the business and the market it operates in
- Poor strategic fit
- Poor management of the due diligence process
- Lack of cultural fit and poor integration plan
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Due Diligence Planning & Preparation
Team selection
▪ Internal
▪ External
Scope
▪ Time, Cost,
Budget
Data Availability
▪ Basic information memorandum
▪ Management presentation
▪ Physical data room
▪ Virtual data room
▪ Due diligence checklist
▪ M&A coordinator
▪ Finance
▪ Legal
▪ Operations/Technical
▪ Commercial/ Market
▪ Strategy
▪ IT/ HR /Insurance etc
▪ Auction/ Bidding Process
▪ Negotiated deal
▪ Minority/ Majority stake
▪ Establish communication channel
▪ Clear roles and responsibilities among team
members
▪ Logistics and timing arrangements
Communication
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Due Diligence Execution
Document Review
▪ Physical or
Virtual
Dataroom
▪ Vendor Due
Diligence
Reports
Management Interviews ▪ Formal
▪ Informal
Site Visits
▪ Financial Data
▪ Technical /Operational Data
▪ Legal and Litigation matters
▪ Asset data (locations)
▪ Sales Data
▪ Employee Data
▪ Insurance
▪ Strategic Plan
▪ Audit Reports
▪ Information systems & technology
▪ To seek clarification on issues raised from
Document review
▪ Limited and scheduled time
▪ Need prepared questions
Other sources of Information
▪ All
▪ Selected
▪ Normally prioritised locations/ sites
▪ Verify existence and consistency of
information
▪ Advisors/
Consultants
▪ Public
Information
▪ Market & Regulatory matters
▪ Permits and leases
▪ Land search
▪ Reputational issues
▪ Post-transaction tax efficient structure
Due Diligence findings may determine Go or No Go for the acquisition
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Translating Due Diligence Findings into Actions
Due Diligence
Findings/
Risks
Pre Acquisition
Issues
(best to be
addressed before
closing)
Post Acquisition
Issues
(best to be
addressed after
closing)
▪ Negotiate for special conditions in the Sales and Purchase
agreements (e.g. warranties and indemnities from Seller,
conditions precedent prior to closing)
▪ Negotiate lower Purchase price or Purchase price adjustment
prior to closing
▪ Request for corporate restructuring e.g. carve out undesirable
assets/ liabilities
▪ Challenge the assumptions given by the Seller
▪ Negotiate for a clear exit plan in the definitive agreements
▪ Exclusivity arrangement with Seller
▪ Agree on post-deal integration plan (e.g. systems integration,
structure, culture, knowledge transfer etc)
▪ Corporate Governance framework
▪ Risks mitigation plans and contingency plans for identified risks
(e.g. single fuel supplier, adverse change in market conditions
etc)
▪ Reporting and monitoring requirements
▪ Implementation of identified ‘upsides’ to the valuation
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Conclusion – Key Success factors for an effective acquisition due diligence and
risks mitigation
Clear strategy and investment thesis
Role of M&A in growth strategy
Deals that can add value
Tone from the top
M&A activities are supported by the CEO and senior management
level
Capable due diligence team with adequate resources
Strong and disciplined principles at each step of the M&A process
Clear commercial deal breakers
Walk away price value
Not too focused on the history but also look at future challenges and
opportunities
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“Vibrant Workforce,
We have come a long way
Note: SAIDI : System Average Interruption Duration Index
VSCI : Very Satisfied Customer Index
Building Capacity Building Performances Building Growth
▪ New businesses
(non regulated)
domestic/
international
▪ Build people
capability
▪ Change mind-set
▪ Improve operations (e.g.
customer service)
International growth
Services and Capacity ASEAN, ME &
AFRICA
Domestic Dominatiom
6-7% system losses
SAIDI < 50 Min VSCI >75%
70% of Capacity
TNB TRANSFORMATION 2020 THE END STATE
Productivity Revolution”
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Potential Collaboration
OPPORTUNITIES AND STRENGTH
Our Strength
▪ Knowledge sharing on equipment
technology
▪ (e.g. transformer, switchgear, cable)
▪ Strategic transformation plan :
geographical expansion.
▪ Strong commitment in renewable
energy.
▪ Personnel development & trainings
▪ Good partnership experience with
international power players. i.e.
Alstom,
▪ GE, Samsung. MOU signed with
other utilities.
▪ USD 22 billion M-cap with a rating of Baa1/ BBB+/ BBB+ (stable outlook).
▪ c.31% owned by Khazanah Nasional Berhad.
▪ Well-known brand to access capital markets.
▪ Partnership for international generation
project - Conventional and Renewable
▪ Major utility player in SEA with strong
capability in managing utility businesses.
▪ Highly experienced in power plants
solution & transmission grid operations.
▪ Rehabilitation, operation and
maintenance of power plants
Collaboration
Knowledge
Rehabilitation
Development
▪ Stringent regulatory environment
within Malaysia.
▪ Public–listed with strong code
of corporate governance.
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The Subsidiaries
PENINSULAR MALAYSIA SABAH
SARAWAK
TNB REMACO TNB Energy Services TNB Engineering
Corporation
Design and development of district
cooling system (DCS)
Conduct energy efficiency audits
and Implement energy efficiency
programs
Conduct feasibility studies and
manage renewable energy projects
Demand Side Management services
Energy services consultancy
TNB REMACO first incorporated as
a 100% subsidiary of TNB in 1995
and managed independently as a
business organisation within the
corporate structure of the TNB
Group
Committed to be a ONE STOP
CENTRE for a total solutions related
to Repair & Maintenance of energy
and petrochemical related industries
REMACO offers core services and
support in the repair and
scheduled maintenance of energy-
related industrial equipment, with
special emphasis on power plant
BMC Abu Dhabi, UAE, 30,000 RT
Al Reef Abu Dhabi. UAE, 8,000 RT
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The Subsidiaries
PENINSULAR MALAYSIA SABAH
SARAWAK
University Tenaga
Nasional
TNB Integrated Learning
Solutions Sdn Bhd TNB Research Sdn Bhd
Technical and management training
centre established in the late 70’s.
Trainers with expertise in the field
of power utility engineering and a
complete range of facilities, which
include world-class tri-fired and
combined cycle simulators, training
workshops, computer labs and
various rooms for small classes to
large seminars.
Certified ISO9001:2001 and UKAS
standards by SIRIM.
Key role is to enhance the core
business of TNB through R&D,
consultancy services, laboratory
testing and quality assurance.
Qualified researchers from various
disciplines are recognised as
experts in their own specialized
fields.
Equipped with state-of-the-art
facilities to support research
activities as well as to provide
technical services to the industry
Invested more than RM 1
billion to build Universiti
Tenaga Nasional, a premier
university that supplies
qualified professionals to
meet the requirements of the
nation particularly the power
industry.
Smart partnerships with
professional bodies - - e.g.
Association of Chartered
Certified Accounting (ACCA)
and Securities Industry
Development Corporation
(SIDC)
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The Subsidiaries Manufacturing of Power Supply Equipment
PENINSULAR MALAYSIA SABAH
SARAWAK
Tenaga Cable Industries
Sdn Bhd
Malaysia Transformer
Manufacturing Sdn Bhd
Tenaga Switchgear Sdn
Bhd
Annual capacity to produce power
and distribution transformers up to
5000 MVA/year and 2500 MVA/year
Provide a broad range of services
including the installation,
commissioning, testing, on-site
service, repairing and refurbishment
of transformers
60% share in the Distribution
transformers market in Malaysia,
and 15.9% in the overall South East
Asian market. (Source: Frost &
Sullivan).
Manufacture and supply of 132kV
and 275kV Gas Insulated
Switchgears, Gas Circuit Breakers
and Disconnectors.
Specialised GIS and Open Terminal
Switchgear Maintenance and repair.
Turnkey Contracting of Transmission
Substations.
Principally involved in the
manufacturing and distribution of a
wide range of power cables.
An ISO 9001:2000 accredited
company since 1997 from Det
Norske Veritas (DNV) of Rotterdam
International projects for PT IKI
Indonesia, Brunei Darul Salam,
Telekom of Libya, Tokyo Electric
Power Corporation of Japan,
National Power Corporation,
Philippines, EVN Vietnam, SAK
Singapore, Hutchinson Hong Kong,
and Powerlink Australia.
76% 60%
TNB subsidiaries manufactures and distributes a wide range of quality electrical products through
majority-owned subsidiaries supporting core business whilst stimulating the local industry
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Million Customers in
Peninsular Malaysia
9.2
CURRENT FOOT PRINT - DOMESTIC
414 SUBSTATIONS
21,469 CIRCUIT KILOMETRES
99,148 TRANSFORMERS
Commersial
industrial
Domestic
others
Commersial
[CATEGORY NAME]
Domestic
Unit sold in
Peninsular Malaysia
111GWh
EXPERIENCED IN DISTRIBUTION OPERATIONS AND
MAINTENANCE AND CUSTOMER SERVICES
EXPERIENCED IN TRANSMISSION OPERATIONS AND
MAINTENANCE
