[KUALA LUMPUR] 1Malaysia Development Bhd agreed to sell its 60 percent stake in a Kuala Lumpur property project to a joint venture between Iskandar Waterfront Holdings Sdn. and China Railway Construction Corp. for 7.41 billion ringgit (S$2.4 billion), moving closer to winding down and selling assets after rising debt raised investor concern.
The property project known as Bandar Malaysia Sdn. is valued at 12.35 billion ringgit, according to a statement from the state-owned investment company. Iskandar Waterfront, a company owned by Malaysian tycoon Lim Kang Hoo, will own 60 per cent of the joint venture, while China Railway will own the remainder.
The announcement of the deal, which is expected to be completed by June, comes more than a month after 1MDB agreed to sell its power assets to China General Nuclear Power Corp for 9.83 billion ringgit. The Malaysian fund, whose advisory board is headed by Prime Minister Najib Razak, announced plans in February to unwind its assets after it drew criticism from lawmakers for accumulating about 42 billion ringgit of debt in its less than five years of existence.
The Iskandar Waterfront-China Railway group beat a consortium involving businessman Desmond Lim and Qatari investors that also bid for the project.
Bandar Malaysia is a mixed-property project encompassing a 196.7-hectare site, according to a Nov 12 statement published on the company's website. The development will also host terminals for the Singapore-Kuala Lumpur high-speed rail and offer future access to major highway networks. The project will be developed over 15 to 25 years at an estimated sale value of 150 billion ringgit, according to 1MDB's statement Thursday.
1MDB faced cash-flow problems after a planned initial public offering of its energy unit was delayed amid unfavorable market conditions, President Arul Kanda said Oct 31. The listing was later cancelled as the company opted to sell the assets.
1MDB has also been the subject of investigations related to allegations of financial irregularities, although an initial Auditor General's report didn't reveal any suspicious activity. Mr Najib has resisted calls from former Prime Minister Mahathir Mohamad to step down over the fund's performance.