Published January 15, 2009

Energy player Agni plans Islamic bonds to raise RM900m

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(SHAH ALAM) Singapore-based renewable energy player Agni Inc plans to raise over RM900 million (S$376 million) by launching two Islamic sukuk issues to fund its expansion, says a report in The StarBiz. 'We are targeting to launch a RM255 million Ijarah-based Islamic bond issue this month,' chief executive Sri Mohanalingham said.

By the third quarter, it plans to launch a second issue of up to RM650 million but this will depend on various factors, one of which is the response to the first issue. 'We will test the market with our initial launch of the RM255 million Islamic bond papers. Several parties have indicated interest to take up the sukuk issue,' he said.

In November the company took over Singapore's online gaming NeteLusion via a reverse takeover and on Tuesday it bought US-based GenCell Corp - a molten carbonate fuel cell developer and manufacturer, to complement its own power generation technology. The purchase allows it entry into the North American market after making inroads into Europe where it has several plants under development. The first to be fully operational will be in Portugal by year-end.

It is also building two 10MW power plants, one in Bera in Pahang for Tenaga Nasional Bhd (TNB) and Felda, and another in Sri Lanka. Both will come onstream by 2010. While it may be difficult for some companies to get financing due to the economic slowdown, Dr Mohanalingham remains confident of the take-up rate for the sukuk issue, pointing out that several syariah-compliant funds are keen to diversify their portfolios from property and financial institutions to renewable energy, said StarBiz.

Will the economic slowdown hit his business? 'We are not a consumer company and our business cycle is not influenced by the economic slowdown. But the challenge for us is to ensure that more people understand the importance of renewable energy. Slowly but surely the change is taking place in terms of policies worldwide and that in itself is a positive development,' he said.

Under the Ninth Malaysian Plan, there are allocations for 350MW renewable energy plants to be developed. But so far only a 30MW capacity plant has been installed while a 50MW capacity plant is under construction. Agni is in the business of using fuel cell technology and converting biomass, that is, empty fruit bunches, wood, landfill and municipal waste, to energy. It has a manufacturing facility in Shah Alam, a power project in Sarawak and headquarters in Singapore.

Agni was set up by Dr Mohanalingham seven years ago after he got bored with investment banking in Europe. Today he and his family and friends own over 98 per cent of Agni while 1.8 per cent is held by Goldman Sachs, Royal Bank of Scotland and ABN Amro. Agni has a paid-up capital of RM45 million. Post listing in August on the Singapore stock exchange via NeteLusion, it is expected to rise to US$106 million. The company has over 80 patents registered to generate power.

Apart from the plants in Portugal and Malaysia, the company is in various stages of project development for its power generation projects in Spain, Norway, Cyprus and Poland. For the plant in Bera, where Felda will provide the biomass, the power produced will be passed on to the national grid. 'The power purchase agreements are being fine-tuned whereby TNB will buy the power from us,' Dr Mohanalingham said.