PT Medco Energi Internasional to sell Power Unit

Indonesian listed oil company PT Medco Energi Internasional is to sell a majority stake in its power unit PT Medco Power to private equity firm Saratoga Capital, writes Reuters. Medco Energi CEO Lukman Mahfoedz told Reuters it has invited Saratoga to expand Medco Power to help tap growing electricity demand.

(Reuters) – PT Medco Energi Internasional, Indonesia’s biggest listed oil company, said on Wednesday it will sell a majority stake in its power unit PT Medco Power to private equity firm Saratoga Capital.

Medco Energi CEO Lukman Mahfoedz told Reuters it has invited Saratoga to expand Medco Power, Indonesia’s biggest independent power producer operating seven plants, to help tap growing electricity demand.

“We need a partner to help fund the power unit expansion,” Mahfoedz said, adding that the details will be announced later this week. “The new shareholder structure will be divided between Saratoga Power and Medco Energi.”

An internal document seen by Reuters said that Medco will sell a 51 percent stake for $112 million to a consortium of investors led by Saratoga Capital, one of Indonesia’s leading private equity firms.

Saratoga declined to comment on the deal.

International Finance Corporation, a unit of the World Bank, will invest around $25 million into the consortium, according to a statement on its website.

Only an estimated 65 percent of Indonesia’s electricity demand is being met, due to a lack of power plants.

Medco Power will use the capital to partially finance building several new power plants, including the $1.2 billion Sarulla geothermal project in Sumatra, Mahfoedz said.

Medco Power’s revenue may exceed $100 million this year, with EBITDA to reach more than $20 million, according to the document. (Reporting by Janeman Latul, Andjarsari Paramaditha and Fathiya Dahrul in JAKARTA and David Fogarty and Harry Suhartono in SINGAPORE; Editing by Neil Chatterjee)