Malaysia’s 1MDB files to list energy assets in US$3b IPO

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Asean Affairs 19 November 2014

Malaysia’s 1MDB files to list energy assets in US$3b IPO

MALAYSIAN state investor 1 Malaysia Development Bhd (1MDB) took a big step towards a planned US$3 billion IPO for its power plant assets, filing a long-awaited application for a flotation that will reduce its huge debt burden, sources said.

The initial public offering (IPO) plans have been delayed several times, bankers have said, as the fund has had to restructure loans and as it bid – ultimately successfully – to build a new domestic coal-fired power plant.

A cross between a sovereign wealth fund and a private investment vehicle, the fund is chaired by Malaysian Prime Minister Najib Razak. But it has been dogged by controversy over the more than US$11 billion in debt it has racked up with its power plant purchases, its investment decisions as well as high fees paid to Goldman Sachs for handling its bond issues.

1MDB filed an application on Friday with the securities regulator to list its power assets on the local bourse, according to two sources with direct knowledge of the matter.

“The listing would be in the first quarter of 2015, likely March,” said one of the sources. The sources said the listing is expected to raise around US$3 billion, which will be used mainly to repay debt.

1MDB officials were not immediately available to comment. The sources declined to be named as the matter was not public.

Raising US$3 billion could place the IPO as Southeast Asia’s fifth-biggest IPO ever, according to Thomson Reuters data. 1MDB has already hired Deutsche Bank and Maybank as joint global coordinators. Goldman Sachs is the main adviser for the IPO while Ambank and Maybank are also advising. Once the regulator clears the IPO application, 1MDB can start marketing it.

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By David Swartzentruber

It is commonplace in journalism to write two types of articles at the transition point between the year that has passed and the New Year. As this writer qualifies as an “old hand” in observing Thailand with a track record dating back 14 years, it is time take a shot at what may unfold in Thailand in 2011.

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