PETALING JAYA: KPower Bhd has entered into a heads of agreement (HOA) with Pristine Falcon Sdn Bhd (PFSB) to acquire a set of mini hydro power plants totaling 29.1MW in Kota Marudu, Sabah that is expected to be fully completed within 12 months.
KPower wholly owned subsidiary KPower RE Sdn Bhd intends to acquire up to 100% stake in One River Power Sdn Bhd (ORP) for up to RM130 million to be satisfied via a combination of cash and issuance of new shares in KPower. The parties will enter into a definitive agreement for the proposal within 45 days from the date of the HOA.
The sale of the shares requires the consent of Inno Hydropower (B) Sdn Bhd as the beneficial owner of 30% of the sale shares and holder of the call option’s right to acquire 10% of the sale shares from PFSB. The sale shares are also subject to the conversion E&E Catalyst Sdn Bhd, who holds 10 million preference shares in ORP.
ORP is an established renewable energy player, primarily involved in the development of hydro power plants in Sabah. ORP is licensed by Sustainable Energy Development Authority of Malaysia under the Feed-in-Tariff (FiT) programme. Currently, ORP has secured a total of three hydro power plants based in Sabah with a total combined capacity of 29.1MW. Under the FiT programme, it has entered into a renewable energy power purchase agreement with Sabah Electricity Sdn Bhd for a concession period of 21 years commencing from the commercial operation date.
To date, one of ORP’s hydro power plant in Sabah has commenced its operations since July 9, 2021 whilst the remaining two plants are still under construction and are expected to be completed in April 2023, barring any unforeseen circumstances. With the existing hydro power plant that is already operational, and the remaining hydro power plants to be completed in less than 12 months, the prospects of ORP are expected to be positive over the concession period of 21 years.
Executive chairman Mustakim Mat Nun (pix) said this acquisition is KPower strengthening its position in the renewable energy space.
“With this acquisition, we are not only an EPCC player in this sector but also an assets owner with dual portfolio with a 50MW solar power plant and soon-to-be 29.1MW hydro power plant.
“These assets, which will be fully operational within 12 months, represent a strategic acquisition for us as it diversifies our assets portfolio. This acquisition is also consistent with the vision and intention of the group’s asset ownership business model for long-term dividend sustainability. This will enable KPower to expand our income streams and further strengthen our position in the sustainable energy and utilities sector,” he said.
The proposed acquisition is expected to provide KPower with a profitable recurring income stream, improves the group’s profitablity and provide better earnings visibility over the long term.
