August 11, 2008

Khazanah in China Joint Venture

KHAZANAH Nasional Bhd said it will spend up to US$150 million (RM495 million) on at least eight waste-to-energy projects in China over the next three years.

The expenditure is part of a larger joint venture between Khazanah and Beijing China Sciences General Energy & Environment Co Ltd (BCSGEE) to develop municipal waste-to-energy projects in China.

The state investment company's managing director Tan Sri Azman Mokhtar said the joint venture would be the first time Khazanah is putting money in the sustainable development sector, a sector it now considers as strategic.

"The global sustainable development sector, in particular alternative energy, is booming with sector investment growth of 40 per cent year-on-year," he said in a statement issued in Kuala Lumpur yesterday.

Through its subsidiary, Tanjung Rhu Investments Ltd, Khazanah is a majority stakeholder in a newly-formed joint venture company with BCSGEE, a Beijing-based leading player in the Chinese environmental protection and municipal waste-to-energy industry.

"The (Chinese) market is still nascent and there is tremendous growth opportunity. Currently, there are some 70 municipal waste-to- energy plants while we estimate that China, with a current urban population of 600 million people, coupled with rising income and urbanisation rate, has room for at least 200 plants in the next few years," Azman said.

Khazanah is in the process of completing the acquisition of a project with 800 tonnes per day installed capacity and are already working on three or four others.

The investment is another milestone in Khazanah's China coverage after opening its Beijing representative office in May this year.

"This transaction allows us to re-invest part of the profits we have realised from our investments in China," he said, referring to Khazanah's success in raising US$647 million (RM2 billion) in March this year through an issuance of exchangeable sukuk and a placement of shares of Parkson Retail Group Ltd, monetizing its first Chinese investment at 920 per cent of cost.

Azman also said the investment is part of the efforts under Khazanah's mandate to invest strategically in both domestic and regional markets.

Domestic and foreign investments currently account for 85 per cent and 15 per cent of Khazanah's total investment portfolio, respectively. It has stakes in more than 50 companies with assets valued at some US$25 billion (RM82.5 billion).

China has said it wants to invest a total of two trillion yuan (RM963 billion) by 2020 on renewable energy initiatives.

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