WREA RE Assets, AGTF aim to increase solar portfolio to 32MW by Q1 this year
24 Mar 2022
Federal International Holdings Bhd (FIHB) joint-controlled entity, WREA RE Assets Sdn Bhd (WREA) has entered into the final stage of negotiation with Asia Greentech Fund (AGTF) to complete the acquisition of a solar plant that has a capacity of 17MW.
The acquisition, upon completion, will bring their solar portfolio to 32MW as both AGTF and WREA have already acquired two solar plants with a total capacity of 15MW in East Malaysia.
This new acquisition is targeted to be completed by the first quarter (Q1) of 2022.
FIHB executive director Datuk Choy Wai Ceong said the company has made significant process after venturing into solar power generation in November 2021.
“AGTF, a fund that invests in green energy and green technology in Asia in response to climate change, is a perfect fit for us.
“With AGTF and Fabulous Sunview Sdn Bhd (FSSB) as our partners, this helps to strengthen the FIHB’s financial capacity to expand its business in the renewable energy segment,” he said.
According to WREA, the total project cost to kickstart the 32MW solar plants is expected to be around RM150 million and will be led by a strong team that offers a synergistic partnership.
The total project cost 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 per cent to 80 per cent.
WREA hopes to obtain financing of around 80 per centt and noted that banks have been very supportive of the project as these assets have signed PPA with Tenaga Nasional Bhd, securing the payback ability.
FIHB’s exposure in the concession company will be lower as WREA takes less than 20 per cent equity stake, with AGTF taking a bigger portion.
However, FIHB may also have a direct stake in some of the solar plants as well.
Averagely, FIHB’s equity stake in each plant range between 10 per cent to 40 per cent.
FSSB, a leading solar power system provider and solar installation company with an unbilled order book of RM592 million in solar PV business, has been appointed as the technical partner for the project.
The company has a cumulative installed capacity of rooftop solar PV facility projects of 11.98MWp and completed the provision of construction and installation of four large scale solar (LSS) PV plants with capacity ranging from 29.92MW ac to 30.00 MWac.
This is in line with FIHB’s direction as FSSB is one of the largest and most successful engineering, procurement, construction and commissioning (EPCC) players in the solar space in Malaysia.
The appointment of FSSB also fits into the partnership as both AGTF and FIHB are shareholders of FSSB, where the latter holds 6.7 per cent direct stake, respectively.
FSSB is also appointed by Malaysia Debt Venture, a subsidiary owned by the Ministry of Finance (MoF), as an auditor for solar plants.
Aside from that, AGTF is a fund that is backed by its partner locally, the Malaysia Venture Capital Management Bhd (MAVCAP), a wholly-owned subsidiary of the MoF.
It also has a strong regional presence.
Hong Kong-listed company, Kasen International Holdings Ltd has entered into a limited partnership agreement which committed to a capital contribution not exceeding US$10 million in AGTF via its wholly-owned subsidiary, Cardina International Company Ltd.
The future plan for the collaboration between WREA and AGTF is to create a solar asset cluster of a minimum 100MW capacity.
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.
According to Choy, WREA and AGTF will also explore the acquisition of brownfield assets that immediately generate operating cashflow to FIHB.
This strategy will help to accelerate the push into the solar and green energy sector as the positive cashflow could sustain the development.
FIHB has strong civil works and construction expertise, while FSSB’s technical know-how could help accelerate the development of these solar plants.
Meanwhile, AGTF’s commitment to growing the renewable energy space in Malaysia fits into both FIHB and FSSB’s expansion plans.