KUALA LUMPUR: Bandar Malaysia, which will be the catalyst for the transformation of Greater Kuala Lumpur, will be developed over a 15 to 25-year period at a projected gross development value (GDV) of RM150bil. It is designed to become Malaysia’s new international landmark when completed.
1Malaysia Development Bhd Group (1MDB) had on Thursday inked a share sale and purchase agreement to sell 60% of the equity in Bandar Malaysia Sdn Bhd (BMSB) to a consortium comprising Iskandar Waterfront Holdings Sdn Bhd (IWH) and China Railway Engineering Corp (M) Sdn Bhd (CREC).
The consortium known as IWH-CREC Sdn Bhd is a 60:40 joint-venture between IWH and CREC.
“The IWH-CREC Consortium has valued 100% of the Bandar Malaysia land at RM12.35bil. Accordingly, its 60% share of land will cost RM7.41bil. 1MDB will receive a 10% deposit of RM741mil upon execution of the share sale and purchase agreement, with completion of the transaction expected by end June 2016,” it said.
1MDB said IWH, the master developer of the Flagship A portion of Iskandar Malaysia Economic Growth Corridor, is a public-private partnership between Credence Resources Sdn Bhd (60%) and Johor State Government-owned, Kumpulan Prasarana Rakyat Johor Sdn Bhd (40%). IWH owns 4,300 acres of prime waterfront land in Iskandar Malaysia.
CREC is one of the world’s largest engineering and construction firms, and also has businesses, amongst others, in industrial manufacturing, real estate development, and resources and mineral products. It is currently ranked number 71 in the Fortune 500, with a turnover exceeding US$100bil per annum.
“Today’s agreement marks the final major milestone in the 1MDB rationalisation plan as presented to the Cabinet of Malaysia on May 29, 2015, following on from the execution of the binding term sheet with IPIC in June 2015 and the share sale and purchase agreement with CGN Group in November 2015,” it said.
1MDB said the agreement was the outcome of a request for proposal (RFP) launched in June 2015 by transaction advisor, CH Williams Talhar & Wong (WTW).
WTW received over 40 expressions of interest from local and international investors including from Singapore, China, Japan, Korea and Australia. Four bidders were shortlisted in September 2015, with two final, binding and funded bids received on Nov 9, 2015.
1MDB president & group executive director Arul Kanda said he was delighted with the outcome of what has been a rigorous, highly competitive and value-enhancing process, which has exceeded the expectations.
“The consortium is a highly attractive development partner for Bandar Malaysia and their bid was fully in line with the objectives outlined in the RFP, namely value maximisation, acceptable commercial terms and certainty of transaction execution.
“As a result of this sale, the Bandar Malaysia development will be 76% owned by Malaysians, of which approximately 54% of the project will be owned by the Federal and Johor State governments, via 1MDB/MOF Inc and KPRJ respectively. The inclusion of CREC as an international partner with 24% of project equity represents significant Foreign Direct Investment (FDI) and is a major testament to the continued strength and attractiveness of the Malaysian economy, as we move into high income nation status.”
IWH Group executive vice chairman Tan Sri Lim Kang Hoo said the participation of IWH in this transaction aligned with IWH’s role as a key master developer in Malaysia.
“The capability of IWH to undertake such major projects is proven, and is due to our philosophy of working in collaboration, cooperation and consultation with all stakeholders. The involvement of IWH in the Bandar Malaysia project creates an important link with the proposed terminus for the High Speed Rail project and other on-going developments in Iskandar Malaysia,” he said
The general manager of China Railway Engineering Corporation and managing director of China Railway Group Ltd Yao Guiqing said: “The participation of CREC as a Consortium partner is due to our confidence in the Malaysian economy, the strength of leadership, the high quality legal and regulatory environment and most importantly, the unique nature of Bandar Malaysia as conceived by 1MDB and as a strategic development project for the Government of Malaysia.
“CREC views our investment in Malaysia as a key part of our global portfolio. In particular, we have global expertise in master planning and construction of transport-oriented developments. We look forward to transferring technology, knowledge sharing and working closely with our Malaysian partners to make the Bandar Malaysia development a world class destination to be proud of.”
The Bandar Malaysia development received Planning Approval from Dewan Bandaraya Kuala Lumpur in October 2015. The “approval-in-principle”, granted based on Bandar Malaysia’s masterplan, is for a mixed-used development with an average gross plot ratio of 4.05, across the entire 486-acre site in Sungai Besi.
Located about seven kilometres from Kuala Lumpur City Centre (KLCC), Bandar Malaysia will serve as Kuala Lumpur’s gateway for the high speed rail-line (HSR) to Singapore and become a central transport hub in the city via MRT line 2 and line 3, KTM and ERL.
There are also advanced plans by the government to improve and provide new highway connections from the city centre to the south that will seamlessly link Bandar Malaysia to other areas within Greater KL.
Bandar Malaysia will be a mixed-use urban development that is expected to serve as a catalyst for the transformation of Greater Kuala Lumpur. The masterplan includes a blueprint for creating quality city living, establishing a global business and creative enterprise hub, and becoming a retail, lifestyle and tourism destination.