UEM Group, a construction and engineering services provider owned by Malaysian sovereign wealth fund Khazanah Nasional, is stepping into the green space with its newly formed subsidiary, UEM Lestra.
The new entity was established to support UEM Group’s foray into the green industries, and its goals to drive Malaysia’s decarbonization agenda and create employment opportunities, particularly in the green sector, for citizens.
To support this new direction, as well as UEM Lestra’s projects and the implementation of its objectives, UEM Group will be tapping the Islamic capital market with an SRI Sukuk program worth RM7 billion (US$1.5 billion) that it will be establishing.
Proceeds from the Sukuk issuances under the program shall be used to finance investments undertaken by UEM Lestra, the company confirmed.
UEM Lestra will be leading UEM Group’s 2023–27 plans to strengthen and organically grow the green assets and operations of its other subsidiaries, and to form strategic partnerships and joint ventures in the green energy space.
The company aims to undertake projects within four sectors: renewables and storage infrastructure (eg solar farms, mini hydro plants, biogas); integrated energy solutions (eg green building services, energy generation technologies, energy efficiency services); green or electric mobility, including electric vehicle charging infrastructure maintenance and services; and waste management and recycling, including waste treatment and disposal.
UEM Group plans to move with a direct and active ownership approach, and has identified several local and international green energy players across the country that are seeking a strategic investor to expand their operations.
Additionally, the company is in discussion with some foreign investors keen on investing in renewable energy development in Malaysia.
“We intend to lead the country’s decarbonization agenda and this includes supporting the government’s efforts to transition towards sustainable energy solutions and to be a carbon-neutral nation, achieving a 70% renewable energy capacity in the country’s electricity supply by 2050.
“We will also be working towards enhancing the domestic green capabilities over the long term and increasing the country’s competitiveness by upskilling and developing local workforce talent,” said Mohd Izani Ghani, the managing director of UEM Group.
Established in 1966 by Khazanah, UEM Group is responsible for many key infrastructure projects in Malaysia, and has core businesses in other sectors, including property development and asset and facility management.
The company and its subsidiaries are also regular Sukuk issuers, printing Islamic medium-term notes and other Islamic papers a few times every year.