ResInvest of Switzerland will invest in the infrastructure subsidiary of coal miner Geo Energy Resources at a valuation of US$1.5 billion.
The subsidiary, PT Marga Bara Jaya, or MBJ, is almost finishing the construction of a 92km hauling road and jetty that can move 50 million tonnes per annum at full capacity.
The road is meant to make it easier for Geo Energy to ramp up production at its mines, and to also lease capacity to neighbouring mines.
Geo Energy, which is valued at nearly $1.1 billion based on last closing price of 61 cents, holds an effective stake of 71.3% in MBJ.
While a binding term sheet has been signed, the actual amount, percentage holding, and other details are to be finalised.
MBJ has already signed agreements with two other nearby mines to lease the capacity, and by doing so, MBJ aims to generate up to an additional US$300 million in annual ebidta within "a few years' time".
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According to Geo Energy, this investment from ResInvest, a Swiss-based private commodities investment company, will help fund further upgrades to the infrastructure and ramp up coal production.
ResInvest is already its substantial shareholder of Geo Energy with a stake of 5.36%.
"The US$1.5 billion valuation of our MBJ’s Integrated Infrastructure business underscores the strength and strategic value of this platform," says executive chairman Charles Antonny Melati.
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"As a cornerstone of our long-term growth strategy, MBJ is expected to enhance our operational capabilities, unlock new revenue streams, and create sustainable value for our shareholders," he adds.
Geo Energy closed at 63 cents on May 11, up 3.28%.
