Iskandar Waterfront weighs Malaysian IPO revival next year

Tan Sri Lim Kang Hoo

KUALA LUMPUR: Malaysian developer Iskandar Waterfront Holdings Sdn Bhd is considering reviving an initial public offering as early as 2017 as it steps up the construction of projects including one linked to embattled state fund 1Malaysia Development Bhd.

The company may pursue a dual listing in Malaysia and Hong Kong or Singapore as it seeks to monetize some of its assets valued at more than 30 billion ringgit ($7.2 billion), Tan Sri Lim Kang Hoo, executive vice chairman of Iskandar Waterfront, said in an Oct. 7 interview in his Kuala Lumpur office. He declined to specify how much the sale would raise and doesn’t rule out the possibility of roping in a strategic partner as part of the offering.

1MDB agreed in December last year to sell 60 percent of a Kuala Lumpur property project to Iskandar Waterfront and China Railway Engineering Corp. for 7.41 billion ringgit, part of its plans to reduce debt. The development, known as Bandar Malaysia, will host terminals for a planned high-speed rail line connecting Kuala Lumpur to Singapore and has an estimated sales value of 150 billion ringgit. 1MDB is now controlled by the Malaysian finance ministry.

“This is a very high-impact project,” Lim said, dismissing concerns of links to 1MDB, at the center of probes at home and abroad as authorities seek to determine if some of the billions of dollars it raised were siphoned off. The development “will sustain the economy for Kuala Lumpur and the country,” he said.

 Few IPOs

Iskandar Waterfront, the master developer of a 4,000-acre (1,620-hectare) coastal city in the southern state of Johor, deferred a proposal to list in 2013 because of weak market sentiment, Lim said. 

While an IPO will help the company fund its mega real estate projects in Kuala Lumpur and Johor, it could also provide a boost to a local stock market that’s seen only nine initial share sales begin trading this year, according to data compiled by Bloomberg. The Malaysian exchange hasn’t hosted an IPO exceeding $500 million since April 2015, the data show.

The joint venture between Iskandar Waterfront and China Railway is currently inviting local and foreign companies to participate in the development of Bandar Malaysia, Lim said, adding that work will start next year. 

Funding the project’s construction is not an issue, as there’s already a pact with a group of international and local banks that will provide financing, he said.

The government said in May that 1MDB will transfer its 40 percent stake in Bandar Malaysia to the finance ministry as part of efforts to restructure the investment company’s debts.

Lim is also chairman of construction company Ekovest Bhd., which will consider a separate listing for its highway assets during the next two to three years, he said. Ekovest is studying the formation of a real estate investment trust with at least 2 billion ringgit in assets, according to Lim.

Ekovest agreed last month to sell 40 percent of the Duta-Ulu Klang Expressway concessionaire to a state-owned pension fund for 1.13 billion ringgit. Proceeds will be used to finance the development of ongoing property projects, it said.

Shares of Ekovest have risen about 93 percent this year, bucking the 1.6 percent decline in the benchmark FTSE Bursa Malaysia KLCI Index over the same period.- Bloomberg