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alaysia-based Nam Cheong Ltd., looking to strengthen its stake in Indonesian waters, will invest up to US$30.7 million for the acquisition of 30 percent shares in Jakarta-listed shipping firm Pelayaran Nasional Bina Buana Raya (BBR) through a rights issue.

A statement published by BBR in the Indonesian Stock Exchange on Monday stated that Marco Polo Marine Limited (MPM), its indirect holding company, had reached an agreement with Nam Cheong on Sept. 26 over a proposed investment by the latter.

MPM is an integrated marine logistics firm, while Nam Cheong is Malaysia'€™s largest offshore support vessel (OSV) builder. Both firms are listed in Singapore.

According to the statement, the agreement will allow the Malaysian company to absorb '€” directly or through its nominees '€” the unsubscribed portion of new shares to be sold by BBR.

BBR is set to hold a rights issue for up to 1.6 billion new shares with a price tag of Rp 230 apiece. The price is higher than the company'€™s share price on the IDX, which jumped by 6.84 percent from Friday'€™s trading to close at Rp 203 per share on Monday, following the announcement.

The local shipping firm is expected to pocket $30.7 million from the rights issue. BBR will use part of the proceeds to purchase five small and mid-sized OSVs from Nam Cheong for $85 million, the statement continued.

MPM, meanwhile, said that the proposed investment would allow the group to use Nam Cheong as an additional reputable source for vessel acquisition, in light of Nam Cheong'€™s expertise and track record in the building of certain OSVs.

'€œIn addition, the proposed investment will facilitate the alignment of interests between the parties with regard to the chartering of vessels acquired or owned by BBR. The proposed investment will also result in the strengthening of BBR'€™s financial position to support fleet expansion and working capital requirements,'€ the statement continued.

BBR currently has an issued and paid-up capital of $41.39 million, comprising approximately 3.77 billion shares. MPM holds a deemed interest of up to 49.6 percent.

The statement explained that following the completion of the corporate action, and assuming that no existing BBR shareholders subscribe for the new shares, Nam Cheong would hold approximately 30 percent of the shipping firm'€™s enlarged share capital.

As for Nam Cheong, this is the second Indonesian initiative for the Malaysian firm, following the launch of a joint venture in September 2013 to own, operate and charter marine vessels.

Nam Cheon chief executive officer Leong Seng Keat said in a separate statement that the Indonesian cabotage rule '€” which obliges shipping vessels operating in Indonesian waters to be domestically owned '€“ had been behind his company'€™s rationale for the investment.

'€œIt is our plan to develop strategic partnerships with regional players to strengthen our position in cabotage-protected countries. Investing in BBR provides us with the platform to gain a foothold in the cabotage-protected Indonesia market given BBR'€™s extensive network and strong presence in the country,'€ he said.

'€œThe investment serves not only to increase our vessel sales but also lays the groundwork for future vessel purchases by BBR.'€

BBR provides transportation services for various kinds of bulk mining material such as coal, granite and sand. By the end of 2013, the company operated 34 barges and 36 tug boats.