Japan's JERA Co has acquired a 22 per cent stake in Summit Power International for $330 million, the companies said on Monday, to enable the establishment of major energy infrastructure projects in Bangladesh.
Singapore-based Summit Power International is the holding company for all power assets of Bangladesh's Summit Group, while JERA is a joint venture between Tokyo Electric Power and Chubu Electric Power Co.
The announcement comes four months after a memorandum of understanding was signed between the companies in Tokyo.
International Finance Corp (IFC), IFC Emerging Asia Fund, and United Arab Emirates-based EMA Power Investment, which were shareholders of Summit since 2016, will exit through this transaction, according to the statement. However, IFC will continue to be a large lender to Summit, it added.
The partnership will support Summit Group's investment plan of $3 billion by 2022 in Bangladesh, Muhammed Aziz Khan, Summit Group's chairman said in the statement.
Bangladesh currently has a capacity to produce 18,000 megawatts of electricity per day, said Nasrul Hamid, the country's junior minister of power, energy and mineral resources said, adding that it aims to increase it to 24,000 megawatts per day by 2021.
"Foreign investment is required to achieve this goal."
JERA said in a separate statement that it has positioned Bangladesh as a priority country for investment due to an expected rapid rise in electricity demand along with steady economic growth in the South Asian country.
"By capitalizing on the strong business foundation established through JERA's investment in Summit Power ... JERA will strive to explore business opportunities in the country and further expand its earnings base," the company added.
The company last month had agreed to buy 49 per cent stake in a new 750 megawatt (MW) gas-fired power station project in Bangladesh, which is under development by India's Reliance Power.