Malaysia's 1MDB lifts IPO target to $3billion as debt swells: source
By Yantoultra Ngui and Niluksi Koswanage
KUALA LUMPUR (Reuters) - State investor 1Malaysia Development Bhd (1MDB) has boosted the target size of its IPO for its energy assets to around $3 billion, a person with direct knowledge of the plan told Reuters, as the fund looks to repay debt incurred in a shopping spree for power plants.
An IPO of more than $3 billion would make the 1MDB deal one of Southeast Asia's largest public stock offerings.
1MDB, which is chaired by Prime Minister Najib Razak, has been expected to launch an offering for at least a year, with early predictions of its size ranging from $1 billion to $2 billion.
After delays due to stock market weakness ahead of closely contested elections in May, the IPO process is now kicking into gear and 1MDB is expected to invite banks next month to formally pitch their services, according to people familiar with the matter.
The timing of the pitching process means the 1MDB deal is likely to land sometime in the first half of 2014, they said. Goldman Sachs (GS.N: Quote), Maybank (MBBM.KL: Quote) and RHB (RHBC.KL: Quote) are expected to have a role in the deal due to their exposure to 1MDB's debt, one person said.
1MDB, fully owned by the government, did not respond to requests for comment.
The fund garnered much negative publicity prior to this year's election, after $4.75 billion worth of debt offerings managed by Goldman Sachs were launched with few public details and kicked in massive fees for the investment bank, according to IFR, a Thomson Reuters publication.
These transactions and others sparked criticism of the fund's debt levels and prompted Najib's political opponents, such as former deputy prime minister Anwar Ibrahim, to call 1MDB a slush fund for the prime minister. 1MDB countered that the allegations were an election ploy. Continued...