KUALA LUMPUR (Feb 3): KJTS Group Bhd (KL:KJTS) is to acquire the entire equity stake in Malakoff Corp Bhd’s (KL:MALAKOF) energy-efficient cooling unit Malakoff Utilities Sdn Bhd for RM65.5 million in cash.

The move is aimed at scaling up KJTS’ cooling operations by leveraging its expertise in energy-efficient cooling solutions to enhance Malakoff Utilities’ performance, according to the ACE Market-listed building support services provider’s bourse filing on Monday.

“Malakoff Utilities owns and operates a large-scale cooling system that supplies chilled water for air-conditioning to 10 major buildings within Kuala Lumpur Sentral (KL Sentral), one of Malaysia’s most prominent commercial and transit hubs,” KJTS said in a separate statement.

These buildings include Plaza Sentral Blocks 1, 2, 3, 4, NU Sentral Mall, Menara Shell, Ascott Sentral, Aloft Hotel, and NU Tower 1 and 2, according to KJTS.

Besides the cooling system, KJTS also noted that Malakoff Utilities also holds an exclusive licence from the Energy Commission Malaysia to distribute up to 135MW of electricity within KL Sentral.

KJTS chairperson Azura Azman said the acquisition will “significantly” increase KJTS’ total revenue and broaden the company’s service capabilities.

“We are confident in unlocking greater efficiencies and long-term value, reinforcing our commitment to sustainable and high-performance cooling solutions,” she added.

According to KJTS, Malakoff Utilities posted a profit after tax of RM1.03 million in the financial year ended Dec 31, 2023 (FY2023), RM1.27 million in FY2022 and RM1.53 million in FY2021. Revenue stood at RM172.44 million in FY2023, RM124.56 million in FY2022 and RM105.68 million in FY2021.

Meanwhile, elaborating on the RM65.5 million purchase consideration, KJTS said the sum was based on Malakoff Utilities’ enterprise value of RM64.1 million and a capital expenditure adjustment of RM1.4 million.

In relation to the acquisition, KJTS noted that it has proposed a variation in the use of proceeds it generated from its initial public offering (IPO) exercise back in January 2024.

Under the variation, RM44.42 million of its IPO proceeds will be used to fund the acquisition of Malakoff Utilities. The remaining RM21.08 million of the purchase consideration will be financed via internally generated funds and/or borrowings.

Previously, this RM44.42 million portion of its IPO proceeds was to be used for the expansion of its cooling energy segment via funding engineering, procurement, construction and commissioning of cooling energy systems, as well as the expansion of its offices in Malaysia, Thailand and Singapore.

“While the company still intends to expand its existing cooling energy segment, it will be carried out via the proposed acquisition as opposed to its earlier plans as disclosed in the IPO prospectus,” it added.

KJTS' acquisition of Malakoff Utilities is expected to be completed by the second quarter of 2025.

Hong Leong Investment Bank has been appointed as the principal adviser to KJTS for both proposals.  

Shares in KJTS ended 2.5 sen or 2.73% higher at 94 sen, valuing the company at RM646.72 million.

Meanwhile, Malakoff shares closed half a sen or 0.57% higher at 87.5 sen, giving the power producer a market capitalisation of RM4.38 billion.

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