Malaysia reverses course on sale of 1MDB’s USD3b power arm

Malaysia scrapped a plan to seek buyers for state investment company 1Malaysia Development Bhd.’s power business, reversing course just a week after saying it appointed a bank to field interest in the assets.
The government, which had hired CIMB Group Holdings Bhd. to run a sale of 1MDB’s Edra Global Energy Bhd. unit, told the bank its services are no longer needed and will push ahead with an IPO of the business, according to statements Wednesday. Bankers seeking roles representing buyers had been speaking to potential bidders from Malaysia, the Middle East and China, people with knowledge of the matter said, asking not to be identified as the information is private.
A debt-fueled splurge by 1MDB landed power plants from Malaysia to Egypt, as well as $11 billion of borrowings — equal to 3.6 percent of Malaysia’s gross domestic product. Malaysia is now seeking to wind down the fund after 1MDB nearly defaulted on a loan and Fitch Ratings said its debt was weighing on the country’s credit rating.
“This flip-flop adds to the confusion over who is in the driving seat when it comes to realizing 1MDB’s assets and paying off the debt,” Dilip Parameswaran, the Hong Kong-based head of independent advisory firm Asia Investment Advisors Ltd., said by phone on Wednesday. “For an investor, it is hard to figure out the value of their assets.” Chong Pooi Koon, Joyce Koh and Lianting Tu, Bloomberg