KUALA LUMPUR: Khazanah Nasional Bhd is investing RM486mil for a 4.95% stake in Beijing Enterprises Water Group Ltd as it seeks exposure to China’s fast growing environmental-related sectors.
Malaysia’s state investment fund said in a statement its unit Mount Reskit Investments Ltd was subscribing for 400 million new shares in the Chinese company or 4.95% in the enlarged share capital at HK$2.95 per share.
Khazanah said the equity investment was part of its collaboration with the Beijing Enterprises Group Co Ltd.
“The collaboration will involve an equity investment into Beijing Enterprises Water Group Ltd (BEWG) and a joint effort to build a sizable platform in the waste-to-energy (WTE) sector,” it said.
Following the subscription, Khazanah will emerge as the third-largest shareholder in BEWG behind Beijing Enterprises Group (47.3%) and Tenson Investment Ltd (8.44%).
“BEWG intends to apply the net proceeds of approximately HK$1.18bil (RM486mil) as general working capital,” it said.
Khazanah also said its subsidiary KCS Green Energy International (Group) Investments Co Ltd and a subsidiary of the Beijing Enterprises Group would combine their WTE resources into a bigger platform in China and potentially expand into other Asian markets.
KCS Green Energy and the Beijing Enterprise Group currently own and operate three and four WTE plants in China respectively with a combined daily design capacity of over 6,000 tonnes.
“Both the water and WTE sectors are highly strategic and yet defensive proxies to China’s continuing urbanisation growth story,” it said.
Khazanah added that rising demand for water, both in quantity and quality, would be a major theme in China over the next decade as water scarcity wold become more acute, driven by population growth, urbanisation and further water pollution issues.
“Khazanah believes that the strategic collaborations with Beijing Enterprises Group will further strengthen its portfolio exposure to such sustainable development investments in China; with the hope that Khazanah, as Malaysia’s strategic investment fund, can somewhat also contribute positively to China’s continued urbanisation process as well as its current economic and social rebalancing efforts.
“In addition, such a multi-facet partnership with Beijing Enterprises Group is also a significant milestone in Khazanah’s China investment strategy as it deepens its roots in China,” it said.