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IWC shares up on expectation of 1MDB deal
AHEAD of an announcement on the winning bid for a controlling stake in 1MDB's planned Bandar Malaysia township in Kuala Lumpur, Iskandar Waterfront City Bhd (IWC) rose 7.4 per cent to RM1.02 on Tuesday as investors bet on its holding company Iskandar Waterfront Holdings Sdn Bhd (IWH) - a reported favourite in collaboration with China Railway Construction Corporation Ltd (CRCC) - to land the deal.
1MDB is scheduled to hold a media conference on Thursday to reveal details of the sale and purchase involving a 60 per cent stake in its unit Bandar Malaysia Sdn Bhd.
Bandar Malaysia Sdn Bhd owns 486 acres of prime land in Kuala Lumpur that is slated to be transformed into a transport-oriented township-hub with easy access to public transport including the KL-Singapore high speed rail (HSR) terminus.
According to media reports, the IWH-CRCC consortium remains the front-runner despite a superior monetary bid submitted by the Malton Group and its Qatari partners after the tender deadline had closed.
1MDB president and group executive director Arul Kanda Kandasamy had estimated the land to be worth some RM500 per square foot or "at least RM11.5 billion (S$3.77 billion)".
If so, IWH-CRCC's reported bid of RM13 billion for a 60 per cent stake would be a welcome bonus to the heavily debt-laden state-owned development company that according to media reports had acquired the land from the government for a mere RM1.6 billion.
Situated on the edge of the city centre, the former air force base is a real estate gem and extremely valuable, said Hall Chadwick Asia chairman Kumar Tharmalingam. "But it's all pie in the sky until the actual delineation of the net land area for development is given."
He estimated the 60 per cent stake would probably entail 70-75 hectares as typically about 40 per cent of the land is taken up by infrastructure such as transport facilities, parks, schools, and police and fire stations.
Even so, there are many plus points including its approved 4.05 gross development ratio and the planned HSR terminus, and two MRT stations.
Mr Arul had indicated previously that the township might also be served by the Express Rail Link, Communter Train and Bus Rapid Transit.
Mr Kumar said that the willingness of the Chinese to put money upfront and their long-term investment view puts them in good stead given that Bandar Malaysia will take some 20 years to complete. In comparison, he observed that the Qataris tend to have a five-year investment time-frame, particularly in third world countries.
The IWH group has large landbanks in Johor - especially in the Danga Bay and Tebrau areas - and the proposed HSR with a stop at Nusajaya would provide a lot of synergies to its interests. Ownership of township development rights could also boost CRCC's chances of bagging the HSR construction job.
Controlled by tycoon Desmond Lim, Malton made a name for itself after its successful development of the popular Pavilion KL mall/serviced residences in partnership with Kuwait Finance House. The Malaysian property group is working on two other large mixed developments in the Klang Valley - one in Bukit Jalil and the other in the high-end suburb of Damansara Heights (in partnership with the Canadian Pension Plan Investment Board) - and is thought to have a lot on its plate already.
Local daily The Star said that a deposit of some RM150 million had been paid by the IWH-CRCC consortium, which is led by tycoon Lim Kang Hoo. Mr Lim is IWC executive vice-chairman and a well-connected businessman with ties to the state government and Johor monarch.
IWH - which owns slightly over 47 per cent of IWC - is a partnership between state-owned Prasarana Rakyat Johor and Mr Lim. The listed IWC has clarified that it was not involved in the Bandar Malaysia tender.
1MDB has been selling its assets to pare its massive debts and last month inked an agreement to dispose of its power plants under Edra Global Energy to China General Nuclear Power Corporation for RM9.83 billion.