PETALING JAYA: The consortium of Iskandar Waterfront Holdings Bhd (IWH) and China Railway Engineering Corp (CREC) has put in a deposit for the proposed acquisition of a major stake in Bandar Malaysia Sdn Bhd (BMSB) amid speculation that a third bidder has entered the fray for the project after the tender has closed.
Sources told StarBiz that the partnership between Tan Sri Lim Kang Hoo’s IWH and China state-owned CREC made the payment of almost RM150mil last week after receiving a letter from 1MDB Real Estate Sdn Bhd (1MDB RE) stating that the consortium was a preferred bidder to be the equity investor and development partner of Bandar Malaysia.
The IWH-CREC consortium, which is a 60:40 China-Malaysia partnership, is one of the final two bidders that have been shortlisted by 1MDB RE for the Bandar Malaysia deal. The other candidate is a large Government-backed investment fund, believed to be Permodalan Nasional Bhd.
An official involved in the deal, meanwhile, told StarBiz that he was not aware of any third party coming in to bid for the project for which 1MDB RE is the master developer.
“We reiterate that there are only two final bidders for the deal; there is no such thing as a third bidder coming in at the last minute,” WTW Real Estate Sdn Bhd deputy managing director Danny Yeo said over the telephone yesterday.
“Negotiations for the Bandar Malaysia deal have only been with the two shortlisted candidates, and no new party has been involved,” he clarified.
WTW is the exclusive transaction adviser on the proposed sale of a 60% stake in BMSB, which is a wholly owned subsidiary of 1MDB RE.
1MDB RE, which, in turn, is a wholly owned subsidiary of 1Malaysia Development Bhd (1MDB), had in June this year taken out an advertisement calling for an expression of interest to develop Bandar Malaysia. The tender for BMSB, which owns the 486-acre land at the old airport site in Sungai Besi earmarked for redevelopment, drew bids from some 40-odd companies. The project is located just three km from the Tun Razak Exchange (TRX) site in the Kuala Lumpur city centre.
StarBiz had last month reported that the race for a majority stake in BMSB could develop into a three-way fight, with the entry of a local company backed by the Qatar government’s investment arm that had expressed strong interest in the project.
This group had reportedly submitted its bid that had valued the entire Bandar Malaysia project at RM15bil after the closing date of submission and after two potential candidates had been shortlisted.
According to sources, the IWH-CREC consortium had valued the entire Bandar Malaysia project at just under RM13bil, which meant it would have to fork out about RM7.8bil for the 60% stake in BMSB. That valuation was the highest between the two shortlisted candidates.
Pending an official announcement, the IWH-CREC consortium is said to be already in talks with BMSB on the joint development of Bandar Malaysia.
“At this stage, I can only say that the two potential candidates that have been shortlisted for the sale of a stake in Bandar Malaysia are ‘preferred’ bidders,” Yeo said.
He declined to comment on whether IWH-CREC had made the deposit payment for the Bandar Malaysia deal or whether the consortium had received any letter stating that it was a preferred bidder.
According to Yeo, the terms and conditions of the deal, including the mode of payment, were still being discussed with the two shortlisted candidates.
“As was disclosed earlier, we hope to conclude the deal by the end of this year,” he said.
The disposal of a 60% stake in Bandar Malaysia is part of the debt rationalisation plan of the highly indebted 1MDB.
The state investment fund had last month announced a deal to dispose of its energy unit Edra Global Energy Bhd, which owns five domestic and eight international power plants with a total capacity of 5,500MW, to China General Nuclear Corp for RM9.83bil.
The company had in the past months also sold several plots at TRX as part of its strategy to speed up the development of the planned commercial centre.
Bandar Malaysia, which had recently received the planning approval from Dewan Bandaraya Kuala Lumpur, had secured an average gross plot ratio of 4.05 across the 486-acre site.
The area had been earmarked for a mixed development project. At RM600 per sq ft, Bandar Malaysia has a price tag of RM12.9bil.
The gross development value of the entire project will be much higher and it will take between 12 and 20 years to be fully developed.
Bandar Malaysia will house the main station for the high-speed rail project between Kuala Lumpur and Singapore – which explains the strong interest from IWH-CREC.
1MDB envisioned Bandar Malaysia to be an inclusive, public transit-oriented city designed as a walkable community through a series of safe and secure pedestrian and cycling networks.
Bandar Malaysia will also include affordable urban housing in its development.