1Malaysia Development Bhd., the state investment company known as 1MDB, plans to raise as much as $2 billion in an initial public offering of its power assets, said a person with knowledge of the matter.
The IPO may take place in the first quarter of next year, said the person, who asked not to be identified as the process is private. 1MDB has recently spent about 10.8 billion ringgit ($3.5 billion) purchasing electricity generation plants.
Malaysian share sales have defied a global slump, with Felda Global Ventures Holdings Bhd. (FGV) and IHH Healthcare Bhd. (IHH) completing two of the world’s three biggest IPOs this year. Companies have raised a combined $5.1 billion in Kuala Lumpur this year, compared with $2.9 billion in Hong Kong and $2 billion in Singapore, according to data compiled by Bloomberg.
“Funds will look at large offerings because they still have lots of cash and limited number of options in big liquid stocks,” said Abdul Jalil Abdul Rasheed, who helps manage $3 billion as chief executive officer at Kuala Lumpur-based Aberdeen Islamic Asset Management Sdn., said in an interview today. “In Malaysia, any large size IPO will generate interest and excitement as can be seen in the Felda and IHH offerings.”
Palm-oil planter Felda Global and IHH Healthcare, Asia’s largest hospital operator, have both advanced more than 11 percent from their offer prices. Malakoff Bhd., Malaysia’s largest independent power producer, is planning to raise about $1 billion through an IPO, people with knowledge of the matter said in June.
Proceeds from 1MDB’s offering would be used to repay debt, the person said. The company, which is developing an $8 billion financial district in Kuala Lumpur, has total debt of 20.7 billion ringgit, according to data compiled by Bloomberg.
1MDB agreed in March to buy billionaire T. Ananda Krishnan’s power interests for 8.5 billion ringgit. This included generating plants in countries including Malaysia, Egypt, Pakistan and the United Arab Emirates.
This week, 1MDB agreed to purchase Genting Bhd. (GENT)’s domestic power-generation business for 2.3 billion ringgit, including its interests in a 720-megawatt plant in Kuala Langat, Selangor.
Goldman Sachs Group Inc. (GS), which advised 1MDB on both deals, is also likely to be hired for the IPO, the person said.
Shahrol Halmi, 1MDB’s chief executive officer, didn’t immediately respond to a phone call seeking comment. Energy is one of the group’s core areas of focus, he said in a statement on March 7, when it announced the acquisition of Ananda Krishnan’s power plants.
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