1Malaysia Development Bhd (1MDB) has agreed to sell 60% of its equity in Bandar Malaysia Sdn Bhd for RM7.41 billion, as part of its rationalisation plan to reduce its RM45 billion debt, it says today.
The stake was sold to a consortium comprising Iskandar Waterfront Holdings Sdn Bhd (IWH) and China Railway Engineering Corporation (M) Sdn Bhd, said 1MDB.
1MDB will receive a 10% deposit, or RM741 million, upon the execution of the share sale and purchase agreement, and the transaction is expected to be completed by end of June 2016.
The consortium valued the total Bandar Malaysia land at RM12.35 billion, said 1MDB.
Its president and group executive director, Arul Kanda Kandasamy, previously said the land would cost at least RM11.5 billion.
The IWH-CREC Sdn Bhd consortium is a 60:40 joint venture between IWH and CREC.
“The winning consortium together with the existing shareholders will resume the remainder of the commitments in Bandar Malaysia, which include the relocation of Pengkalan Udara Kuala Lumpur, a project that costs RM2.7 billion in its entirety.
“The RM2.4 billion sukuk will also be assumed by the project development company,” Arul Kanda told a press conference after the signing ceremony in Kuala Lumpur.
Tan Sri Lim Kang Hoo, the director and vice-chairman of IWH, said it “aggressively” bid for the project because the company saw it as an opportunity to build a new city centre in Kuala Lumpur.
“And we are also aggressive because we see that Bandar Malaysia is linked to Iskandar Malaysia with the high-speed rail.
“So that is the reason we were so aggressive with the pricing,” said Lim, who was also present at the press conference.
CREC general manager Yao Gyuiqing said it participated in the consortium because of its confidence in the Malaysian economy, the strength of leadership, and the “unique nature of Bandar Malaysia”.
“CREC views our investment in Malaysia as a key part of our global portfolio,” Yao said.
Arul Kanda said IWF has a stellar track record, while CREC was a major global construction company with experience in master planning.
“From our perspective, it is very important to have the right mix of expertise and knowledge.”
He added that Bandar Malaysia was “ultimately a Malaysian project”, despite CREC’s stake in it.
“If you add the percentage, you will see that the eventual ownership is 76% Malaysian, 24% CREC.
“The ownership of Bandar Malaysia is also 54% federal and state government, and 46% private sector.
“So from all the angles looking at this, we believe it’s a win-win partnership.”
IWF is a public-private partnership between Credence Resources Sdn Bhd and Kumpulan Rasarana Rakyat Johor (KPRJ), a Johor government entity.
Putrajaya is also a strategic partner in IWH through its subsidiary, Iskandar Waterfront Bhd.
Arul Kanda added that the consortium has also given its commitment to respect the original vision of Bandar Malaysia, as part of the condition of the tender process.
He said 1MDB received more than 40 expressions of interest for Bandar Malaysia from countries around the world, with the two final, binding and funded bids received on November 9, 2015.
“Bandar Malaysia will be a mixed-use urban development that is expected to serve as a catalyst for the transformation of Greater Kuala Lumpur,” 1MDB said in a statement. – December 31, 2015.
Source – http://www.themalaysianinsider.com/malaysia/article/1mdb-to-sell-60-of-bandar-malaysia-to-iskandar-china-group-for-rm7.4-billio#sthash.CzovfS93.dpuf