KUALA LUMPUR: A power plant tender that sovereign wealth fund 1Malaysia Development Bhd (1MDB) is keen to win before a US$2bil (RM6.69bil) initial public offering (IPO) of its power assets has been delayed after bids came in too close to call, Government sources said.
1MDB has begun the process of choosing underwriters for what is likely to be one of South-East Asia’s largest IPOs of the year.
It was expected to bundle 15 power plants it bought over a two-year shopping spree in a bid to a capitalise on growing electricity demand in Malaysia, the Middle East and South Asia, financial sources said.
But bankers and analysts also said the IPO would be more attractive to investors if the fund clinched the rights to build a 2,000 megawatt coal-fired plant worth some US$3.6bil, as some of the plants it owns are near the end of their concessions and new contracts would have to be negotiated.
“1MDB needs to win this tender to increase future cashflows, as some of these power plants (it currently owns) are close to expiry,” said Affin Investment Bank Bhd analyst Chong Lee Len.
“There needs to be a story of growth for the 1MDB IPO,” she said.
But prospects for IMDB and its partner Mitsui & Co Ltd to win the Government tender for the plant, known as Track 3B, are unclear.
Rival YTL Power International Bhd, controlled by the Yeoh family, offered a tariff of 25.2 sen per kilowatt hour (kWh) for the plant, undercutting 1MDB’s 25.3 sen per kWh bid by the smallest of margins, Government officials said.
They declined to be identified, as they are not authorised to speak to the media.
“It is too close,” said one of the officials. “1MDB as the dark horse is putting up a strong fight,” he added.
Malaysia’s energy regulator is more than a week past its self-imposed Jan 20 deadline for announcing the winner.
1MDB and YTL Power could not be reached for comment. — Reuters