1MDB plans RM3.2bil IPO

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KUALA LUMPUR: 1Malaysia Development Bhd (1MDB) plans to raise about RM3.2 billion (US$1 billion) through a public listing of its power assets next year, Dow Jones Newswires reported.

The funds raised through the share sale will help pay off some of the debts of the Malaysian investment company, according to the news wire.

1MDB, a fund started by the government with a capitalisation of RM5 billion, had gone on a buying spree of power generation assets last year.

In May 2012, it acquired the power generation assets of Tanjong plc in a transaction valued at RM8.5 billion. The acquisition was financed by a RM6.17 billion term loan guaranteed by 1MDB and a US$1.75 billion 10-year paper issued by 1MDB Energy Ltd.

The papers issued by 1MDB Energy came with a corporate guarantee from 1MDB and United Arab Emirates-based International Petroleum Investment Co PJSC.

In October 2012, 1MDB through a subsidiary acquired Mastika Lagenda Sdn Bhd, which holds the power generation assets of the Genting group for RM2.38 billion.

The acquisition was funded by a RM700 million term loan guaranteed by 1MDB and issuance of US$1.75 billion 10-year notes.

In addition to the two power generation assets, 1MDB is also bidding to build new power plants in the peninsular.

Recently, the Energy Commission short-listed bidders for the construction of two power plants with different time lines.

One power plant of 1,000mw capacity is to be completed on a fast track basis and ready before 2017. The other is a 2,000mw coal-fired power plant that can be completed a year later. 1MDB has been short-listed for both segments of the competitive tender.

1MDB is a strategic investment company focused on spurring development in key economic sectors.

Apart from power plants, 1MDB is also into property development of prime land belonging to the federal government.

It is developing a 70-acre (28.3ha) parcel of land along Jalan Tun Razak into a financial centre.

The development, called the Tun Razak Exchange, is estimated to generate a gross development value of RM26 billion.

The other major property development project under 1MDB is the development of the Sungai Besi air force base into a major housing and commercial centre.

The master plan for the 484-acre site is already being firmed up and work is expected to start after relocation works for the existing air force, army and police units at the base.

Last year, Malaysia was among the countries with the largest number of high profile public listings.

The IPO market has slowed down since early this year due to the most keenly contested general election that was held on May 5.  

Now, the IPO market is beginning to pick up pace with several large listings being planned.

The latest is the listing of budget long-haul carrier AirAsia X.

This article first appeared in The Edge Financial Daily, on JUNE 19, 2013.