SINGAPORE (Aug 16): Power solutions company XMH Holdings says its wholly-owned subsidiary, XMH Engineering, is establishing a 50%-owned joint venture (JV) company in Myanmar with Myanmar MarcoPolo (MMP) and Bulox Power (BP), which will each hold a 25% interest in the company, respectively.

The initial share capital of the JV is not expected to exceed US$1 million ($1.4 million), while the entity will have an authorised capital of US$50 million.

Under the agreement, XML Engineering will subscribe for 50% of the equity interest for a cash consideration of US$500,000, while the other two companies will subscribe for their respective 25% stakes at US$250,000 each.  

The purpose of the JV will be to manufacture and assemble transformers, generator sets and power solution products in Myanmar, as well as provide after sales and maintenance services relating to these products, says XMH in a regulatory filing on Tuesday.

XMH Engineering will manage the general operations of the JV entity and provide the know-how and expertise required for the manufacture and/or sale of the generator sets and related power solution products.

While MMP’s role will be to identify business opportunities in Myanmar, among others, BP will be responsible for providing the JV company with advice in relation to the design or manufacture of the transformers.

XMH says the JV is in line with the group’s expansion plans, and represents an opportunity for the group to develop closer links with both existing and potential customers in the region, hence furthering its “near-market, near-customer” strategy.

This will allow XML to expand its existing core businesses by tapping onto the existing business network of MMP and by leveraging on the goodwill of the Bulox Power brand in the sale of transformers, expand the range of products offered by the group.

In turn, the group can strengthen its foothold, increase its business activities and operations and raise its profile in the Myanmar market – as well as seize growing business opportunities in Myanmar that will add value to the group’s business and enable it to explore new revenue streams.

Subscription for shares in the JV will be funded through the group’s internal resources, and is not expected to have any material impact on the EPS of the group in the current financial year.  

Shares in XMH Holdings closed 9 cents higher at 35 cents on Tuesday.