Malaysian sovereign fund 1MDB said to delay power IPO

KUALA LUMPUR (Bloomberg) - The initial public offering of 1Malaysia Development Bhd.'s power business will be delayed as the state-owned company tries to resolve debt repayments, people with knowledge of the matter said.

Discussions to sell a stake in the unit to billionaire T. Ananda Krishnan as well as efforts by 1MDB to repay a loan by this month have held up work on the US$3 billion IPO, the people said, asking not to be named as the deliberations are private. The share sale, originally scheduled to take place as early as in April, will be pushed into the second half, they said.

Krishnan is in talks to exercise an option, gained when he sold energy assets to 1MDB in 2012, to buy a stake in the power business, people with knowledge of the matter said on Thursday. The size and terms of the deal are still being discussed, they said. At US$3 billion, the IPO would be Malaysia's biggest since Felda Global Ventures Holdings Bhd. went public in 2012.

1MDB missed two repayment deadlines for a RM2 billion loan and has been given a grace period until the end of January to repay, The Edge reported on Jan. 6, citing unidentified people. Its borrowings climbed to RM41.9 billion as of March 2014 from RM36.2 billion a year earlier, the company said in November.

A spokesman for 1MDB declined to comment.

1MDB built its energy business by buying assets from Krishnan and Genting Bhd. It agreed to pay RM8.5 billion in 2012 for Krishnan's power interests, which included generating plants in countries like Malaysia, Egypt, Pakistan and the United Arab Emirates. The same year, it agreed to buy Genting's domestic power-generation business for RM2.3 billion.

The company, whose advisory board is headed by Prime Minister Najib Razak, said last week it's embarking on a "strategic review" of operations after criticism by opposition lawmakers over rising debt. This month, it appointed as new president Arul Kanda, previously the head of investment banking at Abu Dhabi Commercial Bank.

Krishnan is Malaysia's second-richest person with a net worth of US$9.3 billion, according to the Bloomberg Billionaires Index.

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