Temasek reportedly considering sale of Pavilion Energy assets to industry giants

Singapore’s Temasek Holdings has reportedly initiated the sale process of key assets belonging to its liquefied natural gas (LNG) trading subsidiary, Pavilion Energy.

Established in 2013 to spearhead investments in the LNG sector, Pavilion Energy has grown to become a pivotal player in Singapore’s energy landscape, now supplying a third of the city-state’s industrial gas needs as one of the four appointed LNG importers.

This strategic divestment decision by the sovereign wealth fund comes amid a challenging backdrop of declining spot Asian LNG prices, which have dropped over 40% since mid-August, potentially impacting the deal’s valuation. Notably, energy behemoths Shell and Saudi Aramco have been shortlisted among several contenders vying for Pavilion’s assets, showcasing the high stakes and keen interest in this sale.

Despite experiencing financial setbacks with a loss of US$666 million a year prior, Pavilion reported a substantial recovery with a profit of US$438 million in the fiscal year ending March 2023, alongside a 38% revenue increase to US$9.09 billion.

The sale, advised by Barclays and excluding Pavilion’s gas pipeline business, is now advancing to its final stages, with Temasek evaluating bids that aim to value Pavilion Energy at a minimum of US$2 billion, as reported by Bloomberg in last August.

The transaction’s intricacies remain under wraps, with all parties involved, including Shell and Saudi Aramco, maintaining a discreet stance regarding the ongoing negotiations.