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Malaysia tycoon Ananda Krishnan in talks to take key stake in 1MDB US$3b IPO: sources

Thursday, January 15, 2015 - 17:15
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Malaysia's second-richest man, Ananda Krishnan, is in talks with state firm 1MDB to become a cornerstone investor in a long-delayed, US$3 billion listing of its power assets, two people familiar with the matter said on Thursday.

[KUALA LUMPUR] Malaysia's second-richest man, Ananda Krishnan, is in talks with state firm 1MDB to become a cornerstone investor in a long-delayed, US$3 billion listing of its power assets, two people familiar with the matter said on Thursday.

The reclusive billionaire, who owns holdings in many of Malaysia's biggest listed firms, is considering taking at least a 5 per cent stake in 1MDB's energy business, one of the people said. The people didn't disclose how much Mr Krishnan's stake would be worth since talks on the matter are continuing.

An investment by Mr Krishnan would be a major boost for cash-strapped 1MDB, both in funding and inspiring confidence among other potential initial public offering investors. With Prime Minister Najib Razak chairing its advisory board and criticism of 1MDB's strategy mounting, the firm needs funds from the IPO to cut a debt pile of nearly US$12 billion and to expand business.

Amid a management reshuffle, 1MDB missed a payment on 2 billion Malaysian ringgit (US$562 million) bridge loan that was due end-December to local lenders. That hit its bonds and fuelled broader investor concerns about Malaysia's economy. "Both parties (Krishnan and 1MDB) are now working on the terms," one of the people said, declining to be named as the matter was private. The IPO is now likely to take place in the second quarter of this year, according to one person involved in the deal.

Proceeds from Mr Krishnan's investment could be used to repay the bridge loan. The loan is owed to the country's largest bank, Malayan Banking Bhd, and smaller lender RHB Capital Bhd, and was guaranteed by Krishnan's investment vehicle Usaha Tegas, according to the people familiar with the talks.

The loan guarantee came as part of a transaction Mr Krishnan struck with 1MDB in 2012, when the 76-year-old tycoon sold his power company Tanjung Energy to 1MDB for US$2.8 billion. "They are almost there in terms of a deal," said one person familiar with the discussions, saying that an agreement would be reached by the end of the month.

1MDB officials declined to comment. Usaha Tegas officials were not immediately available to comment.

Mr Krishnan, estimated by Forbes magazine to have a net worth of US$9.7 billion as of this month, is renowned for maximising value for his assets, especially through IPOs. He also has a track record of running profitable power operations through his company Tanjong Plc.

In 2012, Mr Krishnan relisted his pay-TV firm, Astro Holdings Malaysia, in a deal worth US$1.5 billion, valuing the whole company at some 15.6 billion ringgit. He had taken Astro private just two years before when it was valued at 8.3 billion ringgit.

REUTERS