INDONESIAN coal producer Geo Energy Resources has entered into a US$4 million loan agreement with Singapore-headquartered electric vehicle (EV) startup Charged Asia, through its newly incorporated subsidiary, Geo Electric.

The transaction carries the conditional right to convert the outstanding amounts with all accrued interest under the loan into ordinary shares of the electric motorcycle manufacturer.

The deal also has an option to enter into further agreements with Charged Asia to increase its capital investment for up to an additional US$36 million, to become the majority shareholder.

Such a move is aligned with the group’s strategy to diversify its portfolio by investing in sustainable businesses, the group said in a bourse filing announcing this on Friday (Aug 25).

Pointing out that Charged Asia has developed three motorcycle models and delivered more than 1,000 motorcycles in Indonesia, Malaysia and Vietnam, it noted that the startup has “significant potential” to scale its presence in the EV industry.

Moreover, Charged Asia is backed by Australia-listed new energy e-mobility solution provider Vmoto, as well as Exeo Global corporate venture arm DeClout Ventures. Exeo Global facilitates the operational and strategic management of overseas subsidiaries for Tokyo Stock Exchange Prime listed Exeo Group in Japan, it noted.

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Geo Energy’s US$4 million loan to Charged Asia carries an interest of 12 per cent per annum, for a period of 24 months or until conversion, whichever is earlier.

Giving greater context to the group’s capital investment, Geo Energy executive chairman and chief executive officer Charles Antonny Melati said the group wants to “play our part to improve the environment” in Indonesia, knowing that pollution is a growing concern there.

Noting that Indonesia’s capital Jakarta topped the list as the world’s most polluted city and registers unhealthy air pollution levels nearly every day, he said the group thus proactively explored business opportunities to invest in renewable energy. This was an outcome.

“To ensure successful execution, the group will collaborate closely with Charged Asia to grow its business toward becoming a key player in the EV industry within the Asia-Pacific region,” he added.

Shares of Geo Energy closed down 2.3 per cent at S$0.215 before the announcement.