KUALA LUMPUR (March 25): Kejuruteraan Asastera Bhd (KAB) is taking up an 80% stake each in two companies involved in the renewable energy and energy efficiency-related business for RM7.26 million cash, in a deal that will see it assume liabilities worth some RM4.24 million, which values the entire transaction at RM11.50 million.

The electrical engineering services company’s 90%-owned KAB Energy Power Sdn Bhd (KABEP) inked the heads of agreement today with Invest Energy Sdn Bhd to acquire the stakes in the two companies, namely Konpro Industries Sdn Bhd (Konpro) and Meru One Sdn Bhd (Meru).

The acquisitions, which are expected to provide the group with a profitable recurring income stream, are in line with its plan to diversify its business and venture into the renewable energy sector, KAB said in a stock exchange filing.

Konpro is the holding company of a 2 megawatts (MW) waste heat recovery facility located in Siliau, while Meru is the holding company of a 2MW cogeneration facility in Kapar. With Konpro and Meru in the group now, KAB said its portfolio of carbon efficient energy generation assets now total 5.5MW.

Both plants are constructed under a build, operate and transfer contract, are currently operational and already generating revenue. Over the course of the maximum 10-year concessional period, these plants are projected to contribute a total of RM104 million revenue from the generation of an estimated 284,680 megawatt hour (MWh) of electricity.

In a separate press statement, KAB founder and managing director Datuk Lai Keng Onn said he believes that the group’s strategic move into more carbon efficient and sustainable energy generation solves the national and global need for cleaner energy sources.

This is especially so for waste heat recovery plants, where energy that is normally wasted and radiated into the atmosphere is captured and used again to power the facilities, according to Lai.

“We believe that many industrial companies, like metal smelters and food producers, with high energy requirements will be able to benefit from waste heat recovery projects and cogeneration arrangements. There is tremendous market potential for us to move ahead in this space. The group will benefit from recurring and profitable income sources, while also doing our small part to help fight climate change,” he added.

Barring any unforeseen circumstances, the acquisitions are expected to be completed within four months from the date of the agreements.

At 3pm, KAB shares rose 5.5 sen or 6.96% to 84.5 sen, bringing it a market capitalisation of RM768.19 million. The counter saw some 1.28 million shares traded. KAB’s shares price has surged more than 10 times from eight sen a year ago.