Malakoff to take up 70% stake in Kelantan hydroelectric plants

KUALA LUMPUR (March 21): Malakoff Corp Bhd has proposed to buy a 70% stake in a company that is developing three small hydroelectric renewable energy (RE) plants in Kuala Kerai, Kelantan, with a collective capacity of 84 megawatts (MW).

The group on Tuesday (March 21) entered into a heads of agreement on the construction of the three plants with Rising Promenade Sdn Bhd (RPSB), RP Hydro (Kelantan) Sdn Bhd (RPHK), and Rising O&M Engineering Services Sdn Bhd (ROMES).

Malakoff said it will, through its wholly owned subsidiary Tuah Utama Sdn Bhd, buy 70% of the ordinary shares of RPSB, and also subscribe for up to 250 million preference shares in RPSB costing RM250 million.

Malakoff will also purchase 70% of the shares in ROMES from RPSB, the group said in a Bursa Malaysia filing.

Upon completion of the purchases, Tuah Utama will hold a 70% stake in RPHK while RPSB will control the balance 30% stake.

Malakoff said 80% of the estimated total project cost will be funded from the proceeds of the issuance of the Asean Green SRI Sukuk Wakalah and the balance of at least 20% will be funded by the shareholder’s funds, partly via Tuah Utama’s subscription of preference shares in RPHK.

The group said it has, under its strategic transformation initiatives, identified small-hydro as a key growth area within its RE portfolio, which is aligned with Malaysia’s Renewable Energy Roadmap to leverage hydro’s full potential as one of the technology-specific pillars towards achieving a low carbon energy industry.

“The project is in line with Malakoff's long-term aspirational target of achieving its RE capacity of 1,400MW by 2031, as Malakoff is committed to supporting the government’s target of 31% and 40% of RE in the national installed capacity mix by 2025 and 2035, respectively,” it added.

Shares of Malakoff closed half sen or 0.75% higher at 68 sen, giving the group a market capitalisation of RM3.35 billion.