FURNITURE maker-turned-renewable energy (RE) player Federal International Holdings Bhd has accelerated its drive in the solar power generation realm with the acquisition of one more solar plant with a 17 megawatt (MW) capacity.
Yesterday (March 24), the company’s joint-controlled entity WREA RE Assets Sdn Bhd entered into the final stage of negotiation with Asia Greentech Fund (AGTF) to finalise the acquisition targeted for completion by 1Q 2022.
The acquisition is poised to enhance WREA’s solar portfolio to 32MW given both AGTF and WREA have prior to this acquired two solar plants with a total capacity of 15MW in East Malaysia.
“We are thrilled with the progress that the group has made since we ventured into solar power generation in November 2021,” commented Federal International’s executive director Datuk Choy Wai Ceong.
“Our partnership with AGTF, a fund that invests in green energy and green technology in Asia, is a perfect fit for the group. It has helped strengthen the group’s financial capacity to expand its business in the RE segment.”
WREA which is led by a strong team that offers a synergistic partnership expects the total project cost to kickstart its 32MW solar plants to be in the region of RM150 mil.
This investment will be funded via a combination of debt and equity financing. Typically, a concession project with power purchasing agreement (PPA) could obtain financing of between 70% and 80%.
As its assets have already inked PPAs with Tenaga Nasional Bhd to secure the payback ability, WREA hopes to obtain financing of around 80%.
Fabulous Sunview Sdn Bhd, one of the largest engineering, procurement, construction and commissioning (EPCC) players in the Malaysian solar space with an unbilled order book of RM592 mil, has been appointed as the technical partner for the project.
Boasting a cumulative installed capacity of rooftop solar PV facility projects of 11.98MWp (megawatt peak), the company has completed the construction and installation of four large scale solar (LSS) PV plants with capacity ranging from 29.92MWac (megawatt alternating current) to 30.00MWac.
The appointment of Sunview augurs well for the group as both AGTF and Federal International are shareholders with Federal International holding a 6.7% direct stake in Sunview. Moreover, Sunview has also been appointed by Malaysia Debt Venture, a subsidiary of the Finance Ministry (MOF) and dedicated technology financier, as an auditor for solar plants.
Meanwhile, AGTF itself is a fund backed by its local partner, the Malaysia Venture Capital Management Bhd (MAVCAP), which is also a wholly-owned MOF subsidiary.
“The future plan for the collaboration between WREA and AGTF is to create a solar asset cluster of a minimum 100MW capacity,” envisages Choy. “With this plan in place, both WREA and AGTF target to go listing in securitised token offerings in Singapore or via a listing in a regional stock exchange.”
Elsewhere, WREA and AGTF will also explore the acquisition of brownfield assets that can immediately generate operating cash flow to the group. “This strategy will help to accelerate the push into the solar and green energy sector as the positive cash flow could sustain the development,” added Choy.
At the close of yesterday’s (March 24) trading, Federal International was down 0.5 sen or 0.83% to 59.5 sen with 56,300 shares traded, thus valuing the company at RM84 mil. – March 25, 2022
