<article><a style="color: #000080;" href="http://www.dealstreetasia.com/?s=1mdb">1Malaysia Development Bhd (1MDB)</a> now faces the possibility of scrapping its plans for a $3 billion IPO of its power unit, to focus on an outright sale of its energy assets, Reuters reported.</article>

<a style="color: #000080;" href="http://www.dealstreetasia.com/?s=1mdb">1Malaysia Development Bhd (1MDB)</a> now faces the possibility of scrapping its plans for a $3 billion IPO of its power unit, to focus on an outright sale of its energy assets, Reuters reported.
The news wire spoke to three sources with direct knowledge of the deal, who said there had been no formal talks with any interested party yet.
&#8220;Market sentiment is still weak,&#8221; one of the sources said. &#8220;It&#8217;s much better to sell it off directly, or even better if they split up the assets into two or three chunks and sell it off.&#8221;
&#8220;The government is likely to invite a few bidders, who they have selected, to bid for the assets sometime in late July,&#8221; one of the sources told Reuters.
Reuters noted that the gloom surrounding the Malaysian economy may limit appetite for an IPO for Edra Global Energy, which could have been Southeast Asia&#8217;s fifth-biggest, and several foreign firms have expressed interest in a direct purchase of the assets.
However, a handful of local and foreign parties have sounded their interest in the power assets in the past weeks.
Last week, Philippine conglomerate <a style="color: #000080;" href="http://www.sanmiguel.com.ph/" target="_blank">San Miguel</a> indicated it would be interested while a source at Middle Eastern power firm <a style="color: #000080;" href="http://www.acwapower.com/" target="_blank">ACWA Power</a> said the company was also keen, especially on the Egyptian power assets.
Sources and other media reports have said Malaysian state power group <a style="color: #000080;" href="http://www.tnb.com.my/" target="_blank">Tenaga Nasional</a> and construction company <a style="color: #000080;" href="http://www.ijm.com/" target="_blank">IJM Corp </a>could also be in the running. Tenaga and IJM were not immediately available for comment.
Singapore&#8217;s government-linked <a style="color: #000080;" href="http://www.dealstreetasia.com/?s=Sembcorp">Sembcorp Industries</a> told Reuters that 1MDB assets were among many that Sembcorp was looking at as part of its business development plans.
&#8220;However, discussions at this stage are very preliminary,&#8221; it said in an emailed response.
The power assets could be worth up to MYR18 billion ($6.5 billion), according to the sources.
1MDB declined comment on whether the IPO could be scrapped and the Finance Ministry did not reply to Reuters&#8217; requests for comment.
1MDB announced plans to list the power unit in July 2014, aiming to reduce its debt pile of $11.6 billion.
The fund, wholly owned by the Finance Ministry, delayed the offering when investors&#8217; appetite for Malaysian assets evaporated from late 2014. It had been expected to launch the Edra IPO in the second half of this year.
Deutsche Bank and Maybank were appointed as joint global coordinators for the IPO, while Goldman Sachs was adviser with Maybank and Ambank joint principal advisers.
1MDB has been dogged for years by controversy over its management of funds and the huge borrowings it amassed to purchase power assets. Its debt has been a drag on state finances, weighing on the ringgit and Malaysia&#8217;s credit rating.
1MDB has some 15 power and desalination plants in five countries, although many are near the end of their concession agreements.
Its crown jewel is a $3 billion coal-fired plant called Project 3B that it and Japanese trading firm Mitsui &amp; Co won the rights to build last year, though 1MDB&#8217;s liquidity problems have put its ability to build the plant in question.
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1Malaysia Development Bhd (1MDB) now faces the possibility of scrapping its plans for a $3 billion IPO of its power unit, to focus on an outright sale of its energy assets.

1MDB may scrap IPO, to fall back on trade sale

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