Integrated engineering solutions provider ISDN Holdings said yesterday that it acquired 80 per cent stakes in two more Indonesian hydropower-related businesses for a total of US$1.9 million.
The acquisitions are to be funded by the company's reserves. They are the latest in a string of purchases made by ISDN to expand in Indonesia's hydropower production sector.
The two companies, PT Alabama Energy and PT Prima Paluta Energy, were jointly owned by Charles Marpaung and Rahmaniwati Sulaiman. The companies are developing mini hydroelectric power plants in Sumatra.
Sumatra, a big Indonesian island, "offers huge opportunities in energy production as the territory ramps up its electricity sources in tandem with population and economic growth", said ISDN managing director and president Teo Cher Koon in a release yesterday.
PT Alabama is expected to enter into a 20-year power purchase agreement with state-owned power distributor PT PLN (Persero) to build, own and operate a 9 megawatt (MW) plant in North Sumatra. The plant investment cost is estimated at US$18 million, and annual revenue is estimated to be about US$3.6 million.
Similarly, PT Prima Paluta is planning to build, own and operate a 10 MW plant that will cost US$20 million to build and is estimated to generate US$4 million in yearly revenue.
ISDN earned three quarters of its 2012 revenue from its motion control segment, which provides engineering services dealing with movements of machine parts. But it has been diversifying into the Asian energy and power business recently. In April, it said it would collaborate with state-owned China Huadian Engineering on energy-related projects projects in South-east Asia. In early June, the company signed a memorandum of understanding with Japanese fund manager IDI Infrastructures to facilitate funding, financial structuring, feasibility studies and technical support for projects in Indonesia and Myanmar.
Later that month, it announced the acquisition of two Indonesian energy firms developing hydropower plants in Sulawesi. This was followed by the purchases of four other firms developing mini hydropower plants in Sumatra owned by Mr Marpaung and Sugiharto Sulaiman. In July, the firm announced it was exploring the development of a 126 MW hydropower plant in Sulawesi.
ISDN closed at $1.18 yesterday, up half a cent.