SINGAPORE (Aug 23): HG Metal Manufacturing’s wholly-owned subsidiary, HG Metal Investments, has acquired a majority 51.04% stake in Myanmar-based joint venture (JV) company, First Fortune International, from Fortune Peak Investments for US$95,700 ($131,147).

The transaction will reduce Fortune Peak’s stake in First Fortune to 28.96%, with 20% of the remaining shares held by YNJ Engineering, a provider of aluminum and glass façade installation services in Myanmar.   

Upon completion of the acquisition, HG Metal will subscribe for a total of US$11.3 million additional shares in the JV company together with Fortune Peak and YNJ.  

Subsequently, HG Metal has entered into a JV with Fortune Peak and YNJ to establish and operate an advanced steel rebar cut & bend and fabrication facility based in the East Dagon Industrial Zone of Yangon, Myanmar.

HG Metal will have strategic control over the JV as well as the deployment of key management personnel.

Anticipated to be operation by 1H19, it is expected to have an annual processing capacity of 50,000 tonnes. It will mainly undertake the business of processing, fabricating and trading of steel rebars and other steel products.

In a Thursday filing, HG Metal the JV is expected to serve as a natural expansion of its existing business in Myanmar, where sales are already contributing to more than half of the group’s revenue.

The group currently operates a cut & bend and fabrication facility in Singapore with a capacity of 72,000 tonnes per annum.

According to HG Metal, the upcoming JV facility is expected to have a total investment of about US$11.5 million, and will serve the steel fabrication needs of large civil engineering and infrastructure projects around the Yangon region.

“Ever since our entry into the Myanmar market in 2015, we have been waiting for a good time to set up our own facility in Myanmar and this venture comes after the announcement of various major infrastructure projects which will drive demand for steel fabrication services in the coming years,” says Foo Sey Liang, executive director of HG Metal.

“Our Group is confident that with our extensive expertise in the steel industry, we will be able to develop this JV facility to be the premier provider of steel processing services in Myanmar,” he adds.

As at 10:24am, shares in HG Metal are trading flat at 33 cents.