KUALA LUMPUR (March 7): The government-owned 1Malaysia Development Bhd (1MDB) is buying Tanjong Energy Holdings Sdn Bhd for RM8. 5 billion as part of its long-term strategic investment from T. Ananda Krishnan.

According to 1MDB on Wednesday, it signed a definitive agreement on March 2 on the equity purchase.

The transaction is subject to customary financing and regulatory approvals.

The chief executive officer of 1MDB, Shahrol Halmi said: “The acquisition signals the first step towards fulfilling 1MDB’s strategic intent towards fulfilling the country’s long-term energy security.”

Shahrol described Tanjong Energy as a prized acquisition as energy was is one of the core focus areas for 1MDB.

“We are attracted to the strong operating track record of TEHSB, its well-diversified portfolio of quality assets, its strong in-house capabilities and the potential for new growth both here and abroad,” he said.

Goldman Sachs (Malaysia) Sdn Bhd was a financial advisor to 1MDB for the transaction.

TEH owns and operates 13 power generation plants located throughout Middle East, North Africa, South Asia and Asia.

To recap, The Edge Financial Daily reported on Feb 23 that Ananda Krishnan was said to have put his entire power portfolio up for sale after he sold the gaming business last year.

Reuters reported that Ananda is looking to sell his power assets, which are currently located in Malaysia, South Asia, the Middle East and Egypt, that could raise more than US$2 billion (RM6.04 billion).

Standard Chartered plc was hired to run the sale of stakes in about a dozen power plants in Malaysia, South Asia, the Middle East and Egypt with a net generating capacity of nearly 4,000mw, Reuters reported, quoting unnamed sources.

Ananda Krishnan took Tanjong plc private in a RM4.4 billion deal in September 2010. The power assets in Tanjong are held through Tanjong Energy Holdings Sdn Bhd, which has 13 power plants with a total generating capacity of 3,951mw.