KUALA LUMPUR (Dec 7): Gamuda Bhd plans to acquire a 30% stake in ERS Energy Sdn Bhd for RM200 million via the subsciption of shares in the solar energy company.

ERS Energy is one of the largest solar engineering, procurement, construction and commissioning players in the region, with a total project experience of close to 700 MW completed large-scale solar projects, said Gamuda in a Bursa Malaysia filing.

It is currently a joint venture partner of Gamuda in Neda Pekan Sdn Bhd to develop a 39 MW solar power plant under the New Enhanced Dispatch Arrangement (Neda) framework.

The Neda framework allows power producers such as renewable energy producers to supply energy to a single buyer, Tenaga Nasional Bhd, without entering into a power purchase agreement (PPA), and is expected to enhance the competition in the local power generation industry.

Gamuda said the subscription price, which values ERS Energy at a pre-money equity value of RM467 million, was arrived at on a willing-buyer willing-seller basis, and the investment will be satisfied by cash funded via internal generated funds and borrowings.

The group said the partnership with ERS Energy will enable the group to actively participate in the world's transition to net zero, in line with the Gamuda Green Plan which commits the group to reducing carbon emissions intensity by 30% in 2025 and 45% in 2023.

The investment will grow Gamuda's renewable energy asset portfolio to over 800 MW in the next few years.

"Upon completion of the proposed ERS Energy investment, apart from the 30% stake in ERS Energy, Gamuda will also effectively hold 64% of shareholdings in Neda Pekan.

"As Neda framework will form the base for the virtual PPA, the participation in Neda Pekan will put Gamuda and ERS Energy in a front-runner position of the recently announced Corporate Green Power Programme, which uses the virtual PPA mechanism to allow corporate consumers to purchase renewable energy virtually.

"Strategically, Neda is the springboard from which virtual PPAs can be developed, which will then herald a new era of renewable energy generation matching to direct corporate and institutional consumption," said Gamuda.

Shares of Gamuda fell four sen or 1.02% to RM3.88 on Wednesday (Dec 7), giving the group a market capitalisation of RM10.05 billion. Year-to-date, the counter is up by 35.19%.