KUALA LUMPUR (Dec 31): 1Malaysia Development Bhd (1MDB) is selling 60% of Bandar Malaysia Sdn Bhd to a consortium comprising Iskandar Waterfront Holdings Sdn Bhd (IWH) and China Railway Engineering Corp (M) Sdn Bhd (CREC) for RM7.41 billion.

In a statement today, Malaysian government-owned 1MDB said it signed the share sale and purchase agreement with the consortium IWH-CREC Sdn Bhd, which would jointly undertake the 194ha (486 acre) Bandar Malaysia mixed development at Sungai Besi here.

According to 1MDB, the consortium is a 60:40 joint venture between IWH and CREC. 1MDB said the consortium valued the Bandar Malaysia land at RM12.35 billion, hence, the RM7.41 billion for the 60% stake.

"1MDB will receive a 10% deposit of RM741 million upon execution of the share sale and purchase agreement, with completion of the transaction expected by end June 2016.

"The consortium is a highly attractive development partner for Bandar Malaysia and their bid was fully in line with the objectives outlined in the RFP (request for proposal), namely value maximisation, acceptable commercial terms and certainty of transaction execution," 1MDB president and group executive director Arul Kanda Kandasamy said in the statment.

At a press conference today, Arul Kanda said the RM12.35 billion market valuation for the Bandar Malaysia land had exceeded 1MDB's expectation.

He said the market price had exceeded the latest reported book value of the Bandar Malaysia tract and 1MDB's estimation of the site's market value. 
  
"The book value of Bandar Malaysia as at the last publicly available accounts, which is March 31, 2014, was actually not broken down in the accounts, but it is in fact RM4.2 billion.

"We have always stated that our target value for Bandar Malaysia is RM11 billion to RM12 billion. We have now achieved RM12.35 billion, exceeding our expectations in terms of the target value for the rationalisation plan," Arul Kanda said.

Reporters also asked Arul Kanda if the balance 40% Bandar Malaysia stake held by 1MDB would be transferred to the finance ministry, which wholly owns 1MDB.

He said 1MDB had considered the sale of the stake as part of its rationalisation plan.

"As part of the rationalisation plan, there is a consideration for transferring the 40% stake ownership to the finance ministry. At the moment no final decision has been made.

"However it is still an option as envisaged under the rationalisation plan, which was announced in June 2015," said Arul Kanda.