YTL Power seeks out silver linings

THE global landscape may be an increasingly volatile one, but it could still offer opportunities for companies seeking growth.

YTL Power International Bhd (YTL Power) is one such company. It is on the lookout for any opportunity that may arise in an uncertain global economic situation that could be impacted by geopolitical disruptions.

This is why its management announced in January a proposed bonus issue of warrants for its shareholders, says the group’s managing director Datuk Yeoh Seok Hong.

“The warrants issuance is for us to raise money ahead of time in case an opportunity arises.

“We see the world becoming more turbulent now. We anticipate some businesses may not survive or may fail as old models may not work the same as before.

“A lot of distortions in the supply chain will upend things, and some companies will inevitably face problems. We believe the opportunities for us will be there with this disruption,” Yeoh tells StarBiz 7.

“Based on our track record before, it was the Lehman Crisis in 2008 that gave us the opportunity to take PowerSeraya. When there are financial uncertainties and turbulence, there will be a lot of such distortions,” he adds.

The warrants will be issued at no cost to entitled shareholders on the basis of one warrant for every five existing YTL Power shares.

They will be able to convert their free warrants at an exercise price of RM2.45 per warrant, which remains at a discount to YTL Power’s recent share price of RM3.30.

The actual proceeds that will be raised from this exercise will depend on the number of warrants that are exercised during its tenure.

“The fact that our family is prepared to put in this amount of money also means we are confident there are great opportunities ahead for us to take advantage of.

“I don’t discount anything (acquisitions) – our job is to ensure that when there is an opportunity for us to grow, we will be able to seize it. And we have always been innovative on this front,” Yeoh says.

The gross proceeds that will be raised upon the full exercise of the warrants, based on an exercise price of RM2.45 per warrant, is up to about RM4.02bil and RM4.10bil under the minimum and maximum scenarios, respectively.

As of Dec 31, 2024, YTL Power had some RM9.25bil in cash and cash equivalents. According to its shareholder circular, its gearing after a full warrant exercise is poised to drop to between 1.33 times and 1.34 times under the maximum and minimum scenarios, respectively, from about 1.62 times.

Meanwhile, its 53.19%-owned subsidiary Ranhill Utilities Bhd, acquired mid-last year, is a less frequently discussed segment of the group.

Growth prospects here are exciting, especially with the announcement of the Johor-Singapore Special Economic Zone (JS-SEZ), says Yeoh.

“The investment into Ranhill Utilities is critical for our data centre business as well. Recently, it was reported that Johor wants to be independent from Singapore in terms of treated water by 2030.

“Plans are underway to build reservoirs and water treatment plants to enable Johor to achieve this,” Yeoh says.

“Ranhill SAJ Sdn Bhd, the state’s water operator, will spearhead this investment. With the JS-SEZ, there will be a need for more such utilities, and this is why there will be growth in this segment of the business,” he adds.

Analysts generally view the Ranhill Utilities stake acquisition as a strategic fit for the YTL Power group.

Commenting on Ryt Bank, which is a joint venture (JV) partnership between YTL Digital Capital Sdn Bhd and Sea Ltd, Yeoh says the opportunities for synergies within the group are plentiful.

“Sea has a very big eCommerce business through Shopee, which gives us the rationale to go into this partnership with them. The biggest problem with digital banks is the acquisition costs of customers.

“Even within the YTL group, there is a huge customer base that we can all leverage,” he says.

“With a digital bank, we will be able to provide better services and financing to our customers. So, both the YTL group and Sea will be able to use their customer base to help grow this business,” Yeoh adds.

Ryt Bank is operated by the JV company called YTL Digital Bank Bhd, which received approval to commence operations from Dec 20, 2024.

The bank will be launched in phases to ensure a smooth rollout.

The digital bank will incorporate artificial intelligence (AI) into its operations.

For example, the AI-powered private banker is designed to simplify banking services, deliver tailored financial insights, and manage advanced savings strategies.

Meanwhile, commenting on its partnership with Nvidia Corp to build AI infrastructure in Malaysia, Yeoh says he is confident the present tightening of trade relations with the United States will not affect this venture.

“They have all been secured and are under construction,” he says.

YTL Power recently announced it will be among the early adopters of the newly announced Nvidia Blackwell Ultra Instances. The company will deploy the Blackwell Ultra platform at the YTL Green Data Centre campus in Johor.