June 19, 2024

BM Greentech acquisition Expanding the Clean Energy Portfolio

BM Greentech Bhd (BMG) has agreed to acquire the majority share ownership of a solar energy industry player, Plus Xnergy Holdings Sdn Bhd (PXH), for RM110 million, as part of the former’s strategy to entrench itself in the regional clean energy scene.

Details of the Acquisition

BMG has signed a term sheet with the shareholders of PXH to acquire the latter via the issue of 81.48 million new BMG shares at RM1.35 per share. This move will secure the interests of QL Resources Bhd, the parent company of BMG, in the latter as it earns at least 51% equity interest in BMG.

Listed in 2013, PXH’s portfolio has expanded to more than 400 MWp of solar photovoltaic capacity, generating 2,000 GWh of clean energy as of March 2024. PXH provides clean energy EPC (engineering, procurement, construction) services and asset development.

The earn-out feature provides contractual guarantees that PXH is healthy and flourishing, with profitable operations and strong financial results.

The transaction marks the beginning of a synergetic partnership between the two companies, where PXH can bring its expertise to the table and help BMG expand its range of diversified clean energy solutions.

These developments would no doubt strengthen BMG’s position as a regional leader for its innovative and green technologies, opening up unique growth opportunities for both the companies and the world.

Strategic Implications: Synergies and Growth Prospects

There are huge strategic implications for Plus Xnergy Holding Sdn Bhd (PXH) being taken over by BM Greentech Bhd (BMG) in the clean energy sector with regards to synergies and growth opportunities.

With PXH’s strong capability in clean energy engineering, procurement, and construction (EPC) service, BMG further expands its renewable energy production capability to offer more comprehensive end-to-end solutions.

The venture’s strong performance catapults the company into the ranks of the leaders and major contenders in the field. PXH has successfully built more than 400 million watts (MWp) of solar capacity in recent years and generated more than 2 billion-kilo-watt hours of clean energy.

In addition to broadening the scope of services that BMG can provide, it will also expand consolidate its presence in the wider market, bolster its competitive edge, minimize operational costs and optimise timelines, improving its bottom line in the short and long-term outlook.

With the aim of leveraging existing market relations and geographic reach that PXH has built up over the years, BMG will be positioning itself well for future expansion and would be able to further expand its market presence as the renewable energy market continues to develop in the coming years.

Market Response and Future Outlook

The stock price of BMG took off after the announcement was made, with the share price rising 15 per cent to RM1.96, underscoring the confidence among investors of the accretion to valuation of the prized acquisition. Moreover, they intend to inject up to RM50 million in equity capital for the expansion of the PXH footprint.

Its takeover of Plus Xnergy is seen as a milestone for BM Greentech Bhd (BMG) which is also strengthening its presence in the renewable energy sector and hoping to help the region develop sustainably through portable solar power.

With the integration of PXH technology, BMG can explore ways to manufacture these cleaner energies at a lower cost to the environment.

The Bloomberg New Energy Finance (BNEF) claims that the global investment in renewable energy in 2023 was $303.5 billion, which clearly shows how promising this sector is for further investments.

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