1MDB Concludes Strategic Review
Date：2015/02/23
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KUALA LUMPUR -- 1Malaysia Development Bhd (1MDB) on Wednesday announced the outcome of a strategic review which began in January of its business, to enable the company to maximise value for the Ministry of Finance and ultimately the people of Malaysia.
In conducting the strategic review, 1MDB said it was mindful of its vision and mission: to act as a strategic enabler for new ideas and sources of growth, and to drive sustainable economic development in Malaysia.
"1MDB's purpose is to serve as a catalyst, developing assets and projects of strategic importance, with a view to creating maximum value for the economy," 1MDB President/Group Executive Director Arul Kanda, who led the review, said in a statement here.
He said its achievements include consolidating its separate energy assets under Edra Energy with a unified management team and board; establishing the platform for developing the Tun Razak Exchange (TRX) as a financial centre; and successfully positioning the Bandar Malaysia development master-plan.
"Having achieved this, 1MDB will not undertake any new investments or projects and we have developed a clear strategy for each of our existing businesses moving forward," Arul said.
He said the timing was right to establish TRX and Bandar Malaysia as independently managed companies, with full autonomy and accountability for their operational and financial performance, as has been achieved with Edra Energy.
"This is the best way to realise full value from these investments for all stakeholders.
"While options are being pursued with respect to the monetisation of Edra Energy, ownership of our real estate assets must ultimately remain with our 100 per cent shareholder, the Ministry of Finance," he said.
These projects are crucial to the socio-economic development of the country in general and Kuala Lumpur in particular, with TRX and Bandar Malaysia expected to generate, over time, gross development values of RM40 billion and RM150 billion respectively, he said.
"The government's continued ownership will ensure that such value ultimately benefits the rakyat," Arul said.
The statement noted that Edra Energy, which would focus on its core existing projects, will be monetised in 2015 with a portion of the proceeds invested in the business for future growth and the remainder going towards repayment of 1MDB's short-term debt.
Arul said 1MDB recognises that its debt financed capital structure is no longer appropriate for the company, and it intends to take measures to ensure 1MDB and the standalone entities are well-positioned to service debt and infrastructure obligations.
"There is a need for more direct matching of assets and cash-flows," he said.
He pointed out that TRX and Bandar Malaysia would sell land development rights or enter into profit-sharing joint ventures, including with government-linked investment companies as well as with Malaysian and international private sector companies who can contribute not only development expertise but also equity and debt to finance specific projects.
"We expect to implement these plans over the next 12 months, and will provide periodic updates on our progress," Arul said.
In another development, Air Itam and Pulau Indah land will be monetised through joint ventures or outright sale, the statement noted.