Singapore-listed Union Gas Holdings Ltd has signed a non-binding letter of intent (LoI) with Worldbridge Industrial Developments Co Ltd (WBID) to form a joint venture company (JVCo) to supply and distribute liquefied petroleum gas (LPG) in the Kingdom.
The JVCo’s business activities and operations are expected to start by the end of this year, Union Gas said in a March 10 statement.
Under preliminary plans, Union Gas said it will hold a 55 per cent stake in the JVCo and “will second experienced management staff from its Singapore office to support the local Cambodia staff first remotely and then on-site when the Covid-19 situation has eased substantially and the gradual lifting of travel and workplace restrictions enable a more conducive environment”.
WBID will own the remaining 45 per cent of the JVCo and provide it with access to its local business network in the Kingdom, Union Gas said.
“WBID was established in 2019 to develop and drive new and innovative solutions in the manufacturing sector, with the aim of providing the vital link between markets, manufacturers, suppliers and services in Cambodia.
“It is part of the WorldBridge International Group [WIG], which is a diverse solutions provider and conglomerate founded in 1992 that actively pursues investments in national industries in the Kingdom.
“WIG has investments in logistics, construction, real estate, finance, food and beverage, e-commerce, banking and security and is a local pioneer in many of these industries.
“It is this vast business portfolio that the JVCo strives to tap on and grow its market presence. Union Gas and WBID have been in discussions to explore a potential strategic partnership but progress was held back because of the global Covid-19 pandemic in 2020,” it added.
Union Gas executive director and CEO Teo Hark Piang noted that the JVCo was the culmination of a long-term goal set by the company to expand overseas.
“We are very pleased to have found an esteemed partner in WBID to plan our first move overseas in a fast-growing emerging market.
“However, we are mindful that we will need time to familiarise ourselves with the local regulatory and market environment and therefore we have approached this venture with caution including starting with a modest initial investment and choosing the LPG business in which we have core competencies,” he said.
Teo noted that the proposed JVCo marks Union Gas’ debut in the increasingly urbanising Southeast Asian trans-national region of the Mekong River basin, which he likened to Singapore 40 years ago, when the business was first formed.
“That is where we can contribute our experience to the market. This partnership creates an opportunity for [Union Gas] to supply and distribute LPG to buyers of WIG’s fast-growing property development portfolio of residential, commercial and industrial projects across all the major cities in the Kingdom,” he said.
On the Singapore Exchange (SGX), Union Gas’ share price fell S$0.005 ($0.0037) or 0.69 per cent to close at S$0.72 on March 18 for a market capitalisation of S$163.69 million, with 318,200 shares traded.