Solarvest Asset Management (SAM), a wholly-owned subsidiary of Shariah compliant listed solar power company Solarvest, has entered into an agreement to acquire the entire equity interest of Distance Solar Energy (DSE) for RM850,000 (US$181,424).
“The proposed acquisition is expected to be completed in the first quarter of 2024,” Solarvest revealed.
According to Solarvest, the acquisition is in line with its five-year strategic plan to garner 30% of the group’s recurring earnings through renewable energy asset ownership.
The agreement, signed on the 12th January this year, will see SAM pay a sum of RM425,000 (US$90,712) to the vendor before the completion date. The other 50% of the purchase consideration is to be paid within 60 days upon receiving the approval of the relevant government authorities for the acquisition.
The full sum of the acquisition will be funded via SAM’s internally generated funds and will not involve the issuance of new Solarvest shares.
DSE, which has an issued share capital of RM50,000 (US$10,672) comprising 50,000 ordinary shares, is principally involved in solar energy generation under the feed-in tariff scheme. It holds a fee-in approval from the Sustainable Energy Department for its solar asset, which has an installed capacity of 180 kilowatt-peak. The solar asset has a Renewable Power Purchase Agreement (RPPA) with Tenaga Nasional, the national energy company, which is expected to provide the group with a recurring income stream for the remaining roughly 15 years of the RPPA.
Incorporated in 2016, DSE has seen a decline in its revenue for the past few years from a profit after tax of RM104,000 (US$22,198) in 2020 to RM96,000 (US$20,490) in 2022, its audited financial information revealed.
Notwithstanding its dwindling profitability, the purchasing price for DSE, which is RM800,000 (US$170,752) in excess of its issued share capital, was arrived at on a willing buyer–willing seller basis based on discounted cash flows.
Notably, Solarvest is also an issuer of sustainable Sukuk. It issued its debut RM60 million (US$12.81 million) facility under its RM1 billion (US$214.44 million) Sukuk Wakalah program on the 5th September 2023.