Gamuda to expedite renewable energy ops

Gamuda said it has agreed to buy 4.29 million shares, or a 30% stake, in ERS Energy for RM200mil cash.

PETALING JAYA: Gamuda Bhd expects to fast track its renewable energy (RE) business with the proposed acquisition of a 30% stake in ERS Energy Sdn Bhd.

In a filing with Bursa Malaysia yesterday, the engineering and construction company announced it had entered into a subscription and shareholders agreement with ERS Energy for the subscription of 4.29 million new ordinary shares worth RM200mil in cash.

Gamuda noted the investment serves as a launch pad for the group to pursue much wider energy-related opportunities that are in line with the global energy transition to net-zero emissions which include energy storage, smart grids and associated infrastructure.

The group’s equity participation in ERS Energy is also a part of its Gamuda Green Plan 2025 that was launched last year, in which it outlined its commitment to reduce carbon emission intensity by 30% in 2025 and another 45% by 2030.

Gamuda deputy group managing director Mohammed Rashdan Yusof said the equity participation in ERS Energy is aligned with the group’s sustainability and decarbonisation commitments as outlined in its Gamuda Green Plan 2025.

“Investing in RE and other green vertical businesses is one of the company’s strategies to build a new baseline recurring income stream for the group. The closure of this deal came at an opportune time, given the recent successful sale of our four highway concessions,” he said.

ERS Energy managing director and co-founder Jonathan Kan noted the strategic partnership will strengthen the company’s foothold in the regional RE markets.

“This alliance will boost greater clean energy adoption and accelerate the momentum of the sustainability agenda towards reducing carbon emissions in Malaysia and the region,” he said.

As one of the leading solar energy engineering, procurement, construction and commissioning (EPCC) companies in Malaysia, ERS Energy’s expertise lies in solar photovoltaic EPCC and system integrations from small to large-scale deployment.

The solar engineering solutions provider has close to 700 megawatt (MW) completed large-scale solar projects encompassing a diverse range of portfolios like residential, commercial and industrial, and utility-scale projects.

As one of the early entrants into the local solar market, ERS Energy is recognised as a major solar turnkey service provider in Asean with over 695MW solar capacity installed.

ERS Energy is also Gamuda’s joint-venture partner in NEDA Pekan Sdn Bhd, which intends to develop a 39MW solar power plant under the New Enhanced Dispatch Arrangement (Neda) framework.

This investment will also help spur the growth of Gamuda’s RE asset portfolio to more than 800MW in the next few years, making it the largest domestic private RE producer.

ERS Energy stated it will channel part of the proceeds from this exercise into cash accreting solar generation assets such as Neda Pekan.

Some of the funds will also go into its working capital for future RE opportunities expansion into the regional market.

Gamuda will fund the deal with its internally generated funds and borrowing. The first tranche of the subscription shares is RM80mil and the remaining RM120mil will be subscribed based on ERS Energy’s funding requirement upon mutual agreement.

The acquisition will also entitle Gamuda to 64% of shareholdings in Neda Pekan which will put both firms in a frontrunner position of the recently announced Corporate Green Power Programme or CGPP.