Malakoff tables RM288m bid for Khazanah’s Cayman Island company

Barring any unforeseen circumstances and subject to all conditions being fulfilled, the acquisition is expected to be finalised by 4Q19


MALAKOFF Corp Bhd intends to acquire the entire stake in Desaru Investments (Cayman Isl) Ltd from Khazanah Nasional Bhd for US$70 million (RM288 million) to raise its power and water generation capacity.

Under the share sale agreement, Malakoff will purchase the entire interest in the Cayman Island-incorporated company, via its indirect wholly owned unit Malakoff Gulf Ltd (MGL).

If successful, Malakoff’s entire shareholding in Malaysian Shoaiba Consortium Sdn Bhd (MSC) will increase to 80% from the 40% stake now held via MGL.

MSC holds a 50% interest in Saudi-Malaysia Water & Electricity Co Ltd, the operator of a Saudi Arabia-based independent water and power project, which in turn holds a 60% interest in Shuaibah Water & Electricity Co and an indirect interest in Shuaibah Expansion Project Co.

Both utility companies are the main suppliers of water for the Makkah Province in Saudi Arabia and provide 13% of the power and water capacity in the country.

Malakoff, in its exchange filing yesterday, stated the proposed acquisition of Desaru Investments will enable it to increase and consolidate its total effective generation capacity for power and water to 6,708MW and 544,375 cu m per day respectively.

This is against its existing generation capacity of 6,600MW and 420,925 cu m per day.

“The proposed acquisition would provide an immediate earnings accretion to the company, as well as increase in cashflows, to be derived from the remaining contract periods of 10 years (under the aforementioned power and water projects),” it told Bursa Malaysia yesterday.

The independent power producer noted the cash acquisition will be funded with internally generated funds.

Desaru Investments’ profit after tax and net assets were RM27.8 million and RM103.9 million respectively for the financial year ended Dec 31, 2018.

Barring any unforeseen circumstances and subject to all conditions being fulfilled, the acquisition is expected to be finalised by the fourth quarter of this year (4Q19).

While this acquisition is very much aligned with its core power generation business, Malakoff also tabled a RM944.6 million bid to acquire DRB-Hicom Bhd’s waste management company, Alam Flora Sdn Bhd.

The deal, expected to be completed by year-end, is geared towards allowing Malakoff to expand its business into waste and environmental-related services.

Alam Flora holds a lengthy concession (expiring on Sept 1, 2033) to collect solid waste and garbage in the states of Pahang, Kuala Lumpur and Putrajaya.

For 1Q19, Malakoff’s net profit rose 26.6% year-on-year (YoY) to RM67 million on higher contributions from its coal plants, coupled with lower finance costs incurred.

Revenue grew 25.6% YoY to RM2.01 billion over the same period due to higher energy payments from its plants, Tanjung Bin Power Sdn Bhd and Tanjung Bin Energy Sdn Bhd.

The company’s shares closed 0.5 sen lower at 86 sen yesterday as 874,400 shares exchanged hands.