Japan’s Kawasaki Heavy Industries, Ltd (KHI) has upped its stake in DRB-Hicom-backed national motorcycle company Motosikal dan Enjin Nasional Sdn Bhd (Modenas), from 19 per cent to 30 per cent, it said in a statement on Friday.
DRB-Hicom Bhd has entered into an agreement with KHI to sell an additional 14.3 million shares or an 11 per cent stake in Modenas for RM40.3 million ($9.75 million) cash. DRB-Hicom holds the rest.
KHI is also subscribing 52 million convertible preference shares (CPS) to be issued by Modenas. Once converted, KHI’s stake in the company will rise to 48%. The CPS will be convertible subject to Modenas achieving strategic milestones agreed between the parties, said DRB-Hicom.
DRB-Hicom group managing director Syed Faisal Albar believes the new equity structure will benefit Modenas and its customers.
“KHI has been a shareholder of Modenas from the inception of this brand. Even then, their products had helped Modenas chart a leading position in the domestic two-wheeler market. KHI’s larger equity in MODENAS also means they will actively participate in the running of the operations at MODENAS, instead of merely being a shareholder.
“I believe it will augur a vibrant phase of customer-driven products for Modenas, especially in the street bike and sports bike segment,” he said.
Syed Faisal added the existing relationship with KHI will enable both parties to work more efficiently as they develop products for the local market, and the popularity of their key products in Malaysia will be a boost for Modenas.
Modenas and KHI has had a long relationship, beginning with the former’s incorporation in 1995, with KHI owning a 19 per cent equity. Apart from bikes, Modenas also undertakes components machining for KHI. The production facility is located in Gurun, Kedah, and has a production capacity of 130,000 units annually. Modenas’ early products were based on the Kawasaki range of mopeds and cruisers.