SINGAPORE/KUALA LUMPUR (Jan 16): The initial public offering of 1Malaysia Development Bhd.’s power business will be delayed as the state- owned company tries to resolve debt repayments, people with knowledge of the matter said.
Discussions to sell a stake in the unit to billionaire T. Ananda Krishnan as well as efforts by 1MDB to repay a loan by this month have held up work on the $3 billion IPO, the people said, asking not to be named as the deliberations are private. The share sale, originally scheduled to take place as early as in April, will be pushed into the second half, they said.
Krishnan is in talks to exercise an option, gained when he sold energy assets to 1MDB in 2012, to buy a stake in the power business, people with knowledge of the matter said yesterday. The size and terms of the deal are still being discussed, they said. At $3 billion, the IPO would be Malaysia’s biggest since Felda Global Ventures Holdings Bhd. went public in 2012.
1MDB missed two repayment deadlines for a 2 billion ringgit ($557 million) loan and has been given a grace period until the end of January to repay, The Edge reported on Jan. 6, citing unidentified people. Its borrowings climbed to 41.9 billion ringgit as of March 2014 from 36.2 billion ringgit a year earlier, the company said in November.
A spokesman for 1MDB declined to comment.
1MDB built its energy business by buying assets from Krishnan and Genting Bhd. It agreed to pay 8.5 billion ringgit in 2012 for Krishnan’s power interests, which included generating plants in countries like Malaysia, Egypt, Pakistan and the United Arab Emirates. The same year, it agreed to buy Genting’s domestic power-generation business for 2.3 billion ringgit. 1MDB has 3,112 megawatts of local generating capacity and 2,482MW overseas, its website shows.
The company, whose advisory board is headed by Prime Minister Najib Razak, said last week it’s embarking on a “strategic review” of operations after criticism by opposition lawmakers over rising debt. This month, it appointed Arul Kanda as president.
Krishnan is Malaysia’s second-richest person with a net worth of $9.3 billion, according to the Bloomberg Billionaires Index.