US energy firm buys into two mainland utilities
A Houston-based energy firm has bought controlling stakes in two piped-gas utilities on the mainland in rare investments expected to fuel competition in the fragmented but massive sector traditionally dominated by Hong Kong investors.
AEI, which supplies natural gas and electricity to 6.1 million customers in 19 emerging markets, said it broke into the mainland market for the first time by buying 100 per cent of Tongda Energy, which runs city gas and petrol stations around the nation, and 70 per cent of Beijing Macrolink Gas, which supplies city gas in Hunan, for an undisclosed amount.
The American firm's chief executive in Asia, Colin Tam, said the deals would pave the way for further acquisitions on the mainland. 'They provide a solid platform for future growth for AEI in China.'
Some analysts said AEI's purchases supplied fresh competition in the deregulated gas supply market dominated by several players from Hong Kong, which included blue chip Hong Kong and China Gas (Towngas), its associate Towngas China, China Gas Holdings and Xinao Gas Holdings.
However, they said AEI would have to lift the number of projects to build up economy of scale despite its expertise in running 40,000km of gas pipelines and 1,500 petrol stations in 19 emerging markets such as Brazil, Colombia and Bolivia.
Mr Tam said Tongda, incorporated in Singapore, owned controlling interests in nine urban gas projects and served about 150,000 customers.
The company had recently won government franchises in running piped gas services in Jiangxi province and a petrol station in Laizhou city in Shandong province.
The other deal saw AEI buy a 70 per cent stake in Beijing Macrolink, which runs a portfolio of 15 city gas projects with 70,000 customers and holds interests in a 187km gas transmission pipeline between Changsha and Changde in Hunan.
Mr Tam said conglomerate Macrolink Group would retain a 30 per cent stake in Beijing Macrolink. The group is a diversified business with operations in ceramics, vehicle manufacturing, chemicals, real estate, spirits and wine manufacturing and distribution and energy.
All fired up
AEI's entry breaks dominance of HK firms in the sector
The number of countries in which AEI supplies natural gas and electricity to 19
