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Builder of ex-1MDB project weighs IPO for as early as 2020

Kuala Lumpur

ISKANDAR Waterfront Holdings (IWH) is considering an initial public offering (IPO) as early as next year, partly to help fund the US$33.5 billion Bandar Malaysia project, according to people with knowledge of the matter.

It is working with at least one adviser for the listing that may fetch a valuation of about RM30 billion (S$9.82 billion), said one of the people, who asked not to be named because the information is private.

Bandar Malaysia was conceived under 1MDB, and languished when the troubled state fund struggled to finance the development amid corruption investigations.

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1MDB then sought to sell a major stake in the project to developers IWH and China Railway Engineering Corp, before cancelling the deal amid a dispute over payments in 2017. In April, the government gave the developers another chance to revive the project in Kuala Lumpur.

The fundraising would support construction of the property and transport hub that has drawn interest from Chinese tech giants Alibaba Group and Huawei Technologies.

The project was also set to be the hub for the now-suspended high speed rail that would connect Kuala Lumpur to Singapore, allowing passengers to complete that journey in just 90 minutes instead of four to five hours by road.

IWH holds a 60 per cent stake in IWH-CREC, the joint venture assigned to build Bandar Malaysia, with China Railway Engineering owning the rest.

The company controlled by Malaysian tycoon Lim Kang Hoo is the parent of listed real estate developer Iskandar Waterfront City, which surged as much as 6 per cent on Tuesday. The share price has more than doubled this year while Bursa Malaysia's property index declined 10 per cent.

The IPO discussion comes as Malaysia's real estate market struggles with persistent oversupply.

The country had about RM20 billion worth of unsold residential units in the first half of this year, little changed from 2018. That has prompted the government to encourage more foreigners to buy property while calling for banks to lend more. BLOOMBERG