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Sino Construction unit in power generation joint venture
MAINBOARD-LISTED Sino Construction on Tuesday announced that its wholly-owned subsidiary Magnum Energy has partnered Primeforth Special Situation Fund to establish and operate Magnum Modular Power Generation, a joint-venture (JV) company in Singapore.
The JV company will be in the business of generation and sales of electricity from renewable energy sources such as biofuel, said Sino Construction.
Magnum Energy will own 70 per cent of the JV company in terms of shareholdings, while Primeforth will own the remaining 30 per cent.
Magnum Energy will nominate a maximum of three directors to the JV company board - of which one will become chairman of the board - while Primeforth will nominate up to two directors.
Magnum Energy will be responsible for business development and financial management, while Primeforth will be take charge of all operational management scenarios related to the execution of the proprietary micro power plant renewable technologies and associated projects of the JV company.
Sino Construction's expansion into energy resources and power generation will create a visible and stable cash flow and significantly enhance the potential for future profitability, said the company.
Before 2014, it was primarily engaged in building, construction and civil engineering, as well as project consultancy and management services.
"The current liberalisation of power markets worldwide has created significant opportunities for independent power producers to venture into international markets. With international efforts to reduce carbon emissions, most jurisdictions in the world have implemented preferential tariff rates for electricity generated through renewable sources, resulting in immense market opportunities for new entrants to the power generation sector," said the company.
The subscription by Magnum Energy of the shares in the JV company will be funded from internal sources, and the JV is not expected to have any material effect on the net tangible asset and earnings per share of Sino Construction for the financial year ending Dec 31, 2015.