Ranhill to go ahead with China water project investments

PETALING JAYA: Ranhill Holdings Bhd will go ahead with its investments in water projects in China after receiving RM60 million via a management buyout (MBO), following the reverse takeover (RTO) of Symphony House Bhd.
Ranhill had in 2014 entered into a conditional share sale agreement to dispose of the entire equity interest of Symphony to Stone Equity Sdn Bhd through an MBO for RM60 million.
"Please be informed that Ranhill Holdings Bhd has received a total of RM60 million via a management buyout, as part of the reverse takeover exercise. This can be utilised for the business expansion of Ranhill, including investment into China water projects," it said in a statement yesterday.
In a separate announcement yesterday, Ranhill said Ranhill (Yongxin) Water Co Ltd, a unit set up by its sub-subsidiary in China, has clinched a 29-year water concession with an investment estimated at RM31.5 million.
Ranhill Yongxin had on March 9 entered into a public-private partnership concession agreement with the Yongxin County Industrial Development Zone Management Council to undertake the project with a 10-megalitre-per-day wastewater treatment plant.
On Tuesday, PublicInvest Research said Ranhill will not have enough funds from its initial public offering (IPO) proceeds to fully acquire Ranhill Water Technologies (Cayman) Ltd (RWT Cayman) and make further investment in RWT (Cayman) for water projects in China.
The research house said Ranhill may have to abort its plans to expand its water projects in China after it recently fixed the final price of its IPO at a 30% discount to its indicative retail price of RM1.70 a share.
PublicInvest Research clarified yesterday that as result of the lower final price and smaller IPO of 322 million shares instead of 375 million shares, the estimated gross IPO proceeds would be reduced to RM386.8 million from the initial target of RM637.5 million.
"Upon further clarification, our estimated gross IPO proceeds for Ranhill Holdings is revised from RM371.1 million to RM386.8 million post the book-building exercise," it said.
It noted that after full repayment of Ranhill Powertron Sdn Bhd's Islamic medium-term notes of RM220 million and partial repayment of RM100 million sukuk, Ranhill is left with about RM66.8 million from the IPO proceeds.
"We believe the remaining amount would be used for working capital purposes instead of RWT (Cayman) acquisition," it said.
Given a marginal upward revision in the estimated gross IPO proceeds, PublicInvest Research kept Ranhill's earnings forecast and fair value unchanged.
Ranhill planned to inject RM800 million worth of water and power assets, including RWT Cayman, into Symphony under the RTO.