Malaysian state investor 1MDB sinks to a loss on borrowing costs

[KUALA LUMPUR] Malaysian state investor 1 Malaysia Development Bhd (1MDB) fell into the red in the last financial year, hit by an increase in borrowing costs - in a weak set of accounts ahead of a planned US$3 billion IPO for its power assets.

The fund is expected to formally file for the IPO in the near future, bankers have said, as it seeks to cut down on the more than US$11 billion in debt it has racked up with its power plant purchases.

A cross between a sovereign wealth fund and a private investment vehicle, the fund is chaired by Malaysian Prime Minister Najib Razak. But it has been heavily criticised for its debt burden, investment decisions as well as high fees paid to Goldman Sachs for handling its bond issues.

In the year ended in March, net losses came to RM665.4 million (RM$200 million), compared with a profit of RM778.2 million a year earlier.

Separate accounts for 1MDB Energy Ltd, the unit which will be listed, have yet to be filed for the last financial year.

The IPO plans have been delayed several times, according to bankers, as the fund has had to restructure loans and as it bidded - ultimately successfully - to build a new domestic coal-fired power plant.

REUTERS