G CAPITAL Bhd (GCAP) which has recently accelerated its venture into the renewable energy (RE) sphere has recently attracted the attention of investors, largely fuelled by the possible rise of Perak MB Inc as the group’s major shareholder.
The emergence of Perak MB Inc as GCap’s major shareholder will forge a closer tie between the two while opening doors for more collaboration, especially on the development of the hydropower segment.
This is after GCAP has inked a term sheet agreement with Perak MB Inc on July 19 for the proposed acquisition of the remaining 40% stake in Perak Hydro Renewable Energy Corporation Sdn Bhd (PHREC) that it does not own via a share deal that could see Perak MB Inc emerges as the group’s major shareholder.
PHREC currently has the exclusive rights to build, operate and own mini-hydropower plants at 31 pre-identified sites with an estimated total installed capacity of 286.1 megawatts (MW) for a 21-year period from the feed-in-tariff commencement date for each site.
Formed under the Menteri Besar Incorporated Enactment 1951, the core business for Perak MB Inc is sustainable mineral development, responsible asset development and innovative resources development.
The emergence of Perak MB Inc as GCAP’s major shareholders could eventually signal more support from the Perak State Government in other sustainable green energy development.
The interest shown by Perak MB Inc to be an equity participant in GCAP reflects the latter’s confidence in the group’s commitment in developing its RE segment, particularly mini-hydropower plants in Perak, according to GCAP’s executive director Tan Sri Dr Ali Hamsa.
“If you look at the development over the last one year to two years, you can see how the management has transformed the group into a leading local player in the RE segment,” he told FocusM.
“We saw the potential in the RE space as the Government and the public are more aware of the need for sustainable green energy development in the country to reduce the carbon footprint.”
Recurring income
The potential in the recurring earnings via these projects has also led the GCAP management to pour investments into these projects.
“It is starting to bear fruit – and with Perak MB Inc as part of the major shareholder for the group – this could escalate our growth potential further given Perak MB Inc’s success stories,” Ali pointed out.
The collaboration between GCAP and Perak MB Inc also has a perfect synergy given GCAP’s main market in the hydropower segment is none other than Perak.
At the end of last year, GCAP has bagged approval from the Sustainable Energy Development Authority (SEDA) for the 10MW small hydropower plant in Sungai Perak (Salu) via its 90%-owned subsidiary Gunung Hydropower Sdn Bhd. This represents another win for the company in expanding its mini hydropower project in Perak.
While the group has until December 2025 to complete the construction of the project based on the fixed price of 28.98 sen per kWh, the feed-in tariff effective period of 21 years will have a potential revenue generation of RM413 mil.
Aside from that, GCAP’s latest venture into solar power will also help Perak MB Inc to increase its portfolio in the RE segment.
In June, GCAP has signed a 25-year solar power purchase agreement (PPA) with Evergreen Fibreboard Bhd via its 70%-owned subsidiary Solarcity Malaysia Sdn Bhd.
Under the agreement, Solarcity will design, construct, install, own, operate and maintain a solar photovoltaic energy generating system with a total capacity of 7MW under the Net Energy Metering (NEM) scheme at the premise of Evergreen in Batu Pahat, Johor.
With Perak MB Inc as the major shareholder of GCAP and the group’s expertise in both hydropower and solar power development, this will likely lead to more robust interests among other state governments which are looking to expand their RE development in their respective states.
While it is too early to tell if the collaboration would turn out positively for both GCAP and Perak MB Inc, the spike in trading activities in GCAP’s shares suggest that the market believes in the potential of such alliance.
On July 30, the trading volume in GCAP surged to 1.16 million shares as compared to its four-week average volume of 633,000. One thing which is certain is that Perak MB Inc’s emergence as a major shareholder of GCAP reflects the confidence shown towards the management of GCAP.
At the close of yesterday’s (Aug 4) trading, GCAP was down 0.5 sen or 0.74% to 67.5 sen with 357,900 shares traded, thus valuing the company at RM216 mil. – Aug 5, 2021
