IJM CORP BHD’S board is set meet this week to deliberate the proposed acquisition of 1Malaysia Development Bhd’s (1MDB) power assets held under Edra Global Energy Bhd, even as the latter enters the final stage of resubmitting its initial public offering (IPO) application to the Securities Commission (SC).

According to industry sources familiar with the matter, IJM’s management had last month indicated its interest in the power assets to 1MDB unofficially. However, before IJM can proceed, it will need to get its board’s approval.

IJM is also expected to seek clearance from its institutional shareholders. These include the Employees Provident Fund (EPF), which holds 11.8%, Skim Amanah Saham Bumiputera (AmanahRaya), with an 8.4% stake, and Kumpulan Wang Persaraan (Diperbadankan) (KWAP), with 5% interest.

When contacted, IJM’s newly appointed CEO Datuk Soam Heng Choon declined to comment on the matter, but said the company is always on the lookout for new opportunities. Soam was previously the chief executive of IJM’s property development arm, IJM Land Bhd. Likewise, 1MDB’s management also declined to comment.

While IJM does have concessions like highways under its wing, this would be the first time the group is venturing into power generation. One obvious synergy for IJM will be to leverage its construction expertise for the development of new power plants.

However, for IJM, which has a market capitalisation of RM13.2 billion, to acquire Edra Global could prove challenging as 1MDB has paid a cumulative RM12.5 billion for its power assets.

Furthermore, IJM isn’t exactly cash rich and its net gearing is relatively high at 62.08%. Its net debts amounted to RM4.36 billion — RM6.34 billion in debts against RM1.98 billion in cash — as at Dec 31, 2014.

Industry sources say IJM may be looking for a partner that can lend financial muscle for the acquisition. This could include government-linked funds.

Although none of the institutional shareholders have appointed representatives on IJM’s board, it is worth noting that chairman Tan Sri Abdul Halim Ali was the chairman of EPF until his retirement in 2007.

This is not the first time IJM has reportedly shown interest in Edra Global. Unlike previous reports, however, it is understood that CIMB Investment Bank Bhd is not involved this time round. Instead, it appears that Newfields Advisory, led by CEO and founder Seow Lun Hoo is advising IJM on the deal.

Recall that the Ministry of Finance, which wholly owns 1MDB, earlier this year appointed CIMB to find a buyer for Edra Global. The ministry subsequently dismissed CIMB in March, although CIMB had identified several buyers, including IJM.

The rationale for CIMB’s dismissal was for 1MDB to focus on listing Edra Global as originally planned.

Nonetheless, IJM isn’t the only party interested in Edra Global. It was reported two weeks ago that Edra Global had identified a consortium in the Middle East that is keen to take over the company from 1MDB as the IPO promoter.

The consortium would buy a substantial portion of Edra Global and then take it for IPO. This will allow Edra Global to shed the negative sentiment surrounding its current parent.

In the meantime, Edra Global has not lost sight of its original plan to list despite the recent flurry of suitors. According to industry sources, Edra Global is close to resubmitting its application to list, pending approval from some of 1MDB’s bondholders. Recall that some of 1MDB’s debts have covenants over the sale of its power assets.

If all goes well, Edra Global may be ready to resubmit its IPO application to the SC this month. 1MDB has had a challenging time listing its power assets in the past one year and ultimately, had to withdraw its first listing application, despite winning three new power plant projects with a combined capacity of over 4,000mw or over 60% of the existing installed capacity.

Among the reasons for withdrawing the initial application was to make substantial changes, including the removal of Project 3B from the listing. The 2,000mw coal-fired power plant project is being transferred to Tenaga Nasional Bhd.

This article first appeared in The Edge Malaysia Weekly, on May 4 - 10, 2015.

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