Malaysia: Taliworks acquires 35% in waste management co for $60.4m, in third JV with EPF

Taliworks ED Ronnie Lim and EPF CEO Shahril Ridza Ridzuan (middle two) signing a third JV between both parties.

In a third such partnership with Malaysia-based Employees Provident Fund (EPF), Taliworks Corporation Bhd is acquiring a 35 per cent stake in a waste management company, SWM Environment Holdings Sdn Bhd (SWMEH), for MYR245 million ($60.43 million).

The stake acquisition in SWMEH will result in immediate earnings accretion to Taliworks as the former is a mature, profitable and substantial solid waste and public cleansing business in Malaysia.

EPF purchased a 35 per cent stake in SWMEH in December 2015. Another company which owns the remaining 30 per cent in SWMEH was not disclosed.

SWMEH has a concession tenure untuk August 2033.

Taliworks received shareholders’ approval for the acquisition on Tuesday, at its annual general meeting.

Additionally, shareholders also approved the company’s proposed disposal of its entire China waste and wastewater management businesses for a total sale consideration of $54.6 million.

Taliworks is a pure-play infrastructure company engaged in water treatment, highway and toll management, waste and wastewater management.

For EPF, SWMEH is the fund’s first waste management asset.

EPF deputy chief executive officer (investment) Mohamad Nasir Abdul Latif said assets like this are attractive to EPF due to the steady returns.

“For a fund that focuses on generating real rate of returns, this partnership is ideal as it is in line with our diversification programme and is able to provide stability and predictability of income. Furthermore, it benefits from Malaysia’s demographic and regulatory framework,” he said.

To a question whether EPF will look into more waste management assets to invest, Latif said the fund will not be sector-focused, but will look at cashflow stability for their investments.

Taliworks executive director Ronnie Lim Yew Boon commented that the partnership with EPF will continue to drive Taliworks’ merger and acquisition business expansion model.

“Jointly, we will continue to target strategic assets that will generate immediate cashflow and earnings accretion to both entities which will ultimately support Taliworks’ dividend policy,” he said.

Both Taliworks and EPF have two joint ventures prior, both highway concession assets.

In 2014, EPF acquired 49 per cent stake in Grand Saga Sdn Bhd, which holds the concession for the Cheras-Kajang Highway until September 2045.

In 2015, EPF bought 37.5 per cent equity interest in Grand Sepadu Sdn Bhd, which is the concession holder of the New North Klang Bypass Expressway until December 2032.

Both parties see more collaboration opportunities in the future.

When asked if EPF will consider acquiring a direct stake in Taliworks for strategic purposes, Latif commented that if valuations are right, the fund would consider acquiring stake in the company.

Moving forward, Taliworks’ new business strategy is to focus on its portfolio of investments towards mature operational cash-generating utilities or infrastructure businesses in Malaysia and developed markets, as well as when appropriate to partner with EPF.

Taliworks aims to expand and strengthen its recurring earnings and cash flow stream from long-term concessions to sustain its dividend payout policy.

Also read:

Malaysia’s EPF to hike investments in real estate, infra & private equity in five years

SEASAF exits from highway concession holder Cerah Sama for $21.9m

EPF ups stake in Litrak, becomes major shareholder in property developer UEM Sunrise

Malaysia’s EPF has war chest for domestic deals

Malaysia’s EPF outsources $25.2b to external fund managers in 2015

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Following vacancies can be applied for (only in Singapore).   

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.