
Tokyo Century, a leasing company with a growing presence in the renewable energy business, will acquire 5% of TESS Holdings, an engineering and construction company focused on power plants, the companies announced on December 6, 2024. The transaction will be done as part of an energy industry-focused capital and business alliance the two companies will form.
The transaction, expected to be finalized on December 20, 2024, will involve an over-the-counter purchase of 3,532,200 shares from TESS’s Chairman Hideo Ishiwaki and one of its directors, Katsushige Fuji, at 1.1 times the average November 13 to December 13, 2024, closing price, capped at 400 yen per share. Recently, TESS has been trading at approximately 260 to 290 yen per share, valuing the deal at approximately 1.1 billion yen on the higher end of the range.
As part of the alliance, Tokyo Century and TESS Holdings will consider cooperation in four key power-related areas:
- Grid-scale BESS development: Tokyo Century joining projects that TESS Holdings is currently developing by becoming the assets’ owner, providing financing, and signing tolling agreements as the projects’ offtaker
- Energy-saving and renewable energy-related solutions: Expanding TESS Holdings’ sales of such solutions to Tokyo Century-related companies and their customers (Japan Energy Hub’s PPA database shows that TESS Holdings’ subsidiary TESS Engineering is one of the most active smaller-scale on-site PPA providers in the country)
- Power retail and balancing: Expanding TESS Holdings’ sales of power retail and supply and demand balancing solutions to Tokyo Century-related companies and their customers
- Biomass fuel: Collaborating on TESS Holdings’ palm kernel shells sales business, as well as empty fruit bunches and other “resource-recycling” biomass fuels
The alliance between Tokyo Century and TESS Holdings follows Tokyu Land’s recent announcement of its plan to wholly acquire Renewable Japan, a similar move aimed at strengthening the former’s energy-related capabilities.