Malaysia's 1MDB clinched a deal to sell its energy assets to China General Nuclear Power Corporation (CGN) and its subsidiaries for 9.83 billion ringgit ($2.3 billion), a key step for the scandal-hit state fund to cut its debt.
1Malaysia Development Berhad (1MDB), currently at the centre of allegations of graft involving Prime Minister Najib Razak, needed to shed assets to pare back its $11-billion debt pile. Najib, who chairs the advisory board of 1MDB, has denied any wrongdoing.
"We are extremely impressed by the highly regulated, stable and transparent independent power producer framework in Malaysia, which has given us the confidence to make a long-term investment to the country," said He Yu, chairman of state-owned CGN, in a statement jointly issued by 1MDB and its power unit, Edra Global Energy Bhd.
CGN said it will assume all the debt of Edra's companies and the deal is expected to be completed by February 2016.
Malaysia is struggling amid a depreciating ringgit, which is emerging as Asia's worst-performing currency — down nearly 19% against the dollar — and political uncertainty caused by 1MDB.
The sale of Edra Global had drawn interest from at least half a dozen suitors keen to buy into the largest independent power producer in Bangladesh and Egypt and the second-biggest in Malaysia, sources had said. Edra also holds assets in the United Arab Emirates and Pakistan through joint ventures.
State electricity utility Tenaga Nasional Bhd, 30% owned by Malaysian sovereign wealth fund Khazanah Nasional Bhd, was previously highlighted by sources as the favorite to buy Edra.
"CGN Group was a clear winner in this international tender, based on the objectives announced by 1MDB previously, namely value maximization, acceptable commercial terms and certainty of transaction execution," said 1MDB's president Arul Kanda in the statement.
