CRRC INVESTS IN IREKA
Kuala Lumpur, 4 December 2017: Ireka Corporation Berhad (“Ireka”) today announced that it had signed a Share Subscription Agreement and a Memorandum of Understanding (“MOU”) with CRRC Urban Traffic (Europe) Co Ltd (CRRC UT), a member of the China based CRRC Group to invest in Ireka and to establish a joint venture relationship between them. CRRC Group is the world’s largest manufacturer of rolling stock and rail related products and systems.
CRRC UT has taken up a strategic stake in Ireka and will emerge as a substantial shareholder, holding approximately an 8.48% equity interest in the Company upon completion of its share subscription. Together with the share subscription, Ireka and CRRC UT simultaneously signed an MOU to explore business opportunities in four key areas:
- Urban traffic solutions, tourism and infrastructure projects across Malaysia and South East Asia;
- Logistics, with the objective of supporting Chinese companies operating in Malaysia and South East Asia;
- Trading of construction and building materials to support Chinese companies operating in Malaysia and South East Asia; and
- Rail and infrastructure construction projects arising from China’s One Belt One Road initiative in Malaysia.
The Share Subscription Agreement and MOU are important milestones for a long-term strategic collaboration between Ireka and the CRRC Group. It provides a platform for both parties to leverage on each other’s technical knowledge, expertise and experience for expansion and growth in these four areas. Ireka’s Board is confident that the investment from this joint venture will provide the ideal opportunity to diversify into a number of exciting new areas, in particular, urban traffic solutions and rail infrastructure related projects.
The partnership with CRRC UT will see Ireka venturing into a new business direction that is in line with Malaysia’s Economic Transformation Programme, to upgrade the country’s public transportation and infrastructure system with the aim to increase modal share of public transport to 40% by 2030. Ireka envisages this partnership with CRRC
UT to provide urban traffic solutions to develop efficient integrated public transport systems will contribute positively to this goal.
A giant for the railway transportation industry in the world, the CRRC Group already has a presence in Malaysia and is an active player in the country’s rail industry through its supply of contracts for the LRT System, Express Rail Link and KTM Komuter. Ireka is ideally positioned to take on this new challenge because it has a fifty year track record in building a number of major national infrastructure projects. Ireka played a significant part in the construction of notable projects like the North-South Highways, KLIA International Airport, Cheras-Kajang Highway and the most recent MRT1 Package V7.
Commenting on the partnership, Ireka’s Group Managing Director, Datuk Lai Voon Hon said, “We are particularly pleased to welcome CRRC UT as our new strategic shareholder in the Company. The stake that CRRC UT has invested in Ireka and the upcoming joint venture is another great step forward for our Company’s growth. I am also proud that CRRC UT has selected Ireka as a trusted partner to grow their presence in Malaysia and South East Asia; and we are delighted to have a financially strong partner in the world’s largest manufacturer of rail rolling stock and urban transportation products. There is no doubt that CRRC’s technical know-how and our wide business network accumulated over the last 50 years will complement each other well. We will now begin working earnestly on our partnership plans to explore exciting business opportunities.”