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 spent about 10.8 billion ringgit ($3.5 billion) purchasing the electricity generation plants.
1MDB joins Malaysian companies including Malakoff Bhd. in planning IPOs after sales by Felda Global Ventures Holdings Bhd. and IHH Healthcare Bhd. rewarded investors with stock-market gains. Malaysia, whose economy unexpectedly accelerated in the most recent quarter, accounts for two of the world’s three largest IPOs this year, data compiled by Bloomberg show.
Proceeds will be used to repay debt, the person said. 1MDB, 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.
Malakoff, Malaysia’s largest independent power producer, is planning a share sale that may raise about $1 billion, people with knowledge of the matter said in June. Palm-oil planter Felda Global and IHH Healthcare, Asia’s largest hospital operator, have both advanced 11 percent from their offer prices.
1MDB agreed in March to buy billionaire T. Ananda Krishnan’s power assets for 8.5 billion ringgit. This week, 1MDB agreed to purchase Genting Bhd. (GENT)’s domestic power generation business for 2.3 billion ringgit. 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.