Three bids in for 1MDB energy assets

The Malaysian sovereign wealth fund says it is reviewing offers for Edra Global Energy that are close to its $3.7bn target.

1Malaysia Development Berhad (1MDB), a Malaysian state investment fund, expects to garner between MYR16 billion (€3.39 billion; $3.73 billion) to MYR18 billion for its energy unit, according to its president. 

Arul Kanda Kandasamy told reporters in Kuala Lumpur this week that the fund has received offers for Edra Global Energy that are close to its target. It is now in the process of negotiating the sale and purchase agreement (SPA) with three final bidders, he said.

These are currently conducting confirmatory due diligence in key aspects of their proposal, he explained. They're due to make the best and final offer after the SPA and due diligence are finalised and completed.

Kandasamy added that the amount includes the assumption of the unit’s debt. 

The submitted bids came from local and international companies, according to reports. Tenaga Nasional, Malaysia’s state-owned energy company, is understood to have made a conditional offer for the assets, while two other international bidders remain unidentified. 

Press sources had previously disclosed an unconfirmed list of shortlisted bidders for the asset, comprising Saudi Arabia’s ACWA Power International, Qatar’s Nebras Power, Hong Kong-listed CGN Meiya Power, and Tenaga Nasional.

It is understood that ACWA Power was not invited to submit, and that CGN Meiya aborted its bid. 

Kandasamy said 1MDB expects the bids to be finalised by mid-November.  

The assets could reach an equity value of as much as MYR8 billion, according to reports. Foreign bidders, which may be restricted to owning no more than 49 percent of the asset stakes, will be encouraged to team with a local partner, unless they seek an exemption. 

Owning a net generation capacity of 5,594 megawatts (MW), 1MDB is the largest independent power producer in Bangladesh and Egypt and the second-biggest in Malaysia after Malakoff Corporation. It also holds assets in the United Arab Emirates and Pakistan through joint ventures.

Edra, its power unit, has five domestic and eight international power plants with a total capacity of 5,500MW. These are estimated to be worth MYR12 billion collectively.

The Edra sale is part of 1MDB’s efforts to reduce its $11 billion debt pile to a manageable level by end of this year.