KUALA LUMPUR (Dec 10): Telecommunications network services provider OCK Group Bhd (KL:OCK) is expanding its renewable energy portfolio with a proposed RM350 million investment in a large-scale solar photovoltaic (LSSPV) power plant in Malaysia through Solarpack Suria Sungai Petani Sdn Bhd (3SP).
OCK announced it had signed a conditional investment agreement with Spain-based Zelestra Corporacion SAU and its wholly owned subsidiary Solarpack Asia Sdn Bhd (SPK Asia) for the proposed development, according to its filing with Bursa Malaysia on Tuesday.
The investment involves OCK acquiring 1,000 redeemable preference shares in SPK Asia where it will be based on a final subscription amount that will be satisfied entirely in cash.
It also involves Zelestra novating a loan of RM14.23 million to OCK, which OCK will pay in cash to Zelestra. The loan relates to an outstanding amount owed to Zelestra by JKH Renewables Sdn Bhd. JKH currently holds a 51% stake in 3SP with SPK Asia owning the remaining 49%.
According to the filing, 3SP is the developer and operator of a 116MW LSSPV plant in Kedah, commissioned under Malaysia's Large-Scale Solar 3 programme. The plant, which began commercial operations in March 2022, is backed by a 21-year power purchase agreement (PPA) with Tenaga Nasional Bhd (KL:TENAGA), or TNB.
“OCK intends to focus on expanding across all its business segments, taking proactive approaches to capitalise on opportunities in various growing industries and expanding its portfolio to include renewable energy, data centres and digital solutions,” the group said.
OCK currently manages 29 solar generation assets in Malaysia.
The group noted that the investment will bolster its solar generation capacity, positioning it to benefit from government-led renewable energy initiatives, including additional large-scale solar projects.
“These initiatives present a significant growth avenue, allowing the group to secure new projects, enhance its market presence, and contribute to the government's renewable energy goals," it said, noting that the 3SP solar project offers stable, long-term revenue secured under its PPA with TNB until 2043.
For FY2023, OCK recorded a revenue of RM722.78 million, of which RM54.32 million came from its green energy and power solutions segment.
OCK intends to fund the investment through internal cash reserves and bank borrowings. As of Nov 25, 2024, OCK had borrowings of RM829.96 million, with a net gearing ratio of 1.03 times. Post-investment, borrowings are expected to increase to RM920.96 million, with gearing rising to 1.15 times.
The proposed investment is subject to shareholder approval at an extraordinary general meeting and regulatory clearance. Barring unforeseen circumstances, the deal is expected to close by the second quarter of 2025.
Shares in OCK closed unchanged at 48.5 sen on Tuesday, giving the group a market capitalisation of RM514.77 million. Year-to-date, the stock has gained over 10%.