KUALA LUMPUR (May 11): Ranhill Utilities Bhd has proposed to acquire stakes in two companies in line with its business expansion objectives and growth strategies to diversify its income streams into other businesses with promising prospects to supplement existing businesses.

The move was also aimed at mitigating the risks of relying on current ongoing businesses, it said.

One of the proposals filed with Bursa Malaysia today is a Share Sale Agreement (SSA) it entered into with Ranhill Bhd to acquire 100% of Ranhill Bersekutu Sdn Bhd (RBSB) for RM93.87 million, to be satisfied by the issuance of 98.81 million new ordinary shares in Ranhill Utilities at an issue price of RM0.95 per share.

Ranhill Utilities has also signed an SSA with Ranhill Group Sdn Bhd (RGSB) to acquire 4.48 million shares or 51% interest in Ranhill Worley Sdn Bhd (RWSB) for RM117.95 million, to be satisfied by 124.164 million new Ranhill Utilities shares at the same issue price.

The acquisitions are expected to be completed by the third quarter of 2021.

“Upon completion of the SSAs, the Board anticipates that the proposed acquisitions may potentially contribute 25% or more of the net profits of the Ranhill Group,” it said.

“In addition, both companies (RBSB and RWSB) will be invaluable addition and complementary to the Group’s current water and power division, as well as taking advantage of the Malaysian government’s continuous push with its policies in supporting the development of renewable energy such as solar, hydro and biomass.”

RBSB, which was incorporated in 1981, has a long operating track record particularly in the water and wastewater treatment sector in Malaysia and Southeast Asia. 

Meanwhile, RWSB has a 25-year joint-venture arrangement with Worley Australia (a 49% shareholder). This has allowed RWSB to utilise the capabilities and technology from the transition and new energy sector such as biomass, wind-farm structures and storage systems for renewable energy from Worley Australia.

Ranhill Utilities also said upon completion of the acquisitions, the stake held by Tan Sri Hamdan Mohamad or any parties acting in concert (PACs) with him will increase to 46.83%, from 35.78%. 

“In view of the above and pursuant to the proposed acquisitions, Hamdan and related PACs intend to seek an exemption from the Securities Commission Malaysia from the obligation to undertake a mandatory takeover offer,” it said.

Going forward, the Ranhill Group will continue with its existing business in the water and power business which has provided it with stable revenue and earnings visibility, following long-term contracts and renewable licences for the segments. 

Ranhill Group is also expecting the prospects for these segments to be favourable in view of the continued demand for water and power.

“There are opportunities for the Group with the National Non-Revenue Water Reduction Programme under the 11th Malaysia Plan, which will involve the replacement of 41,560km of old pipes under a RM1.39 billion allocation under the programme.”