Navis plugs into Southeast Asia energy demand

Kuala Lumpar-based Navis Capital Partners hopes to tap into the potential growth of the region's power sector through an investment of up to MYR40 million ($13 million) in Malaysia's HG Power Transmission (HGPT) for a more than 50% stake. The transaction was structured as a direct purchase of a small equity stake in the company plus a subscription to new shares via a substantial capital injection.

HGPT is not a power generator - this would have been a more capital-intensive investment, requiring a much larger ticket size - but is engaged in the design and construction of transmission lines and substations that bring the power to the populace. The company operates through three division that include, transmission, substation and fiber optic.

"It is a service business, so a lot of the company's success has been based on its track record and reputation for delivering projects on budget and on time," says Raj Ayadurai, a partner with Navis, adding that his firm worked on the investment for the best part of a year, having been attracted by the potential for leveraging HGPT's reputation in the sector.

"This company has been around for quite sometimes and they have managed to survive because they are innovative in the technologies they employ."

While is Malaysia's power situation isn't as is not as dire as that of its neighbors - the country enjoys an overall electrification rate of 99.4% - companies like HGPT have found plenty of demand overseas. HGPT turned to private equity because of a lack of credit for expansion overseas, so Navis' capital has been earmarked for use establishing operations elsewhere in Southeast Asia, particularly in less developed economies.

"HGPT is already operating in Indonesia and Bangladesh and it has previously worked on projects in Sri Lanka - it is growing quite well," explains Ayadurai. "It is difficult for local Malaysian companies because local banks are happy to lend for domestic projects but are less willing to provide facilities for overseas projects."

This is Navis' fifth investment from its Malaysian Growth Opportunity Fund I and its second this year. The MYR300 million is fund is now two thirds deployed. Earlier investments include IT services provider Strateq, cinema operator MCAT Box Office, and private education services provider SEG International. Navis manages over $3billion in equity capital.

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• Topics
• Expansion
• Industrials
• Infrastructure
• Southeast Asia
• Navis Management
• Southeast Asia
• Malaysia
• energy
• Infrastructure
• Growth capital