KUALA LUMPUR, 15 April 2013: 1MDB (1Malaysia Development Berhad) has raised the required capital for its new strategic economic initiatives between Malaysia and Abu Dhabi.
This capital is an integral part of the Government-to-Government collaboration between Malaysia and Abu Dhabi on a strategic partnership sealed on 12 March 2013 during the visit by Abu Dhabi’s Crown Prince and Deputy Supreme Commander of the Armed Forces of the United Arab Emirates, His Highness General Sheikh Mohamed Bin Zayed Al Nahyan.
Both countries are committed to now kick-start the operations of this strategic RM18b partnership. 1MDB opted for a private placement to ensure the timely completion of this economic initiative.
Through the 50:50 joint venture company, Abu Dhabi Malaysia Investment Company (ADMIC), 1MDB and its partner Aabar Investments PJS will leverage on their global resources to drive these initiatives.
The proceeds from the US$3 billion capital raised is being utilised for investments in strategic and important high-impact projects like energy and strategic real estate which are vital to the long term-economic growth of both countries.
1MDB Chief Executive Officer Mohd Hazem Abd Rahman said: “This success underlines investor appetite and confidence in the Malaysia-Abu Dhabi partnership as well as in Malaysia as a sustainable growth centre enjoying peace, stability and good governance.”
The two companies (1MDB and Aabar) are government owned and supported.
1MDB’s bonds have received an A- rating from rating agency Standard & Poor’s (S&P), which also assigned an “axAAA” Asean regional scale rating.
1MDB and its Tun Razak Exchange (TRX) could potentially be the first investment by ADMIC.
TRX is estimated to generate a gross development value of RM26 billion and attract 250 of the world’s leading companies, creating 40,000 new job opportunities for knowledge workers. The multiplier effect generated will produce up to 500,000 new jobs, directly and indirectly throughout Malaysia, by the time it is fully completed.
1MDB has also earmarked US$2.318 billion, which are proceeds originating from its 1MDB-PetroSaudi International joint venture, for future investments.
As of FY13, all PSI Murabaha notes have been fully redeemed at a profit. The proceeds are reinvested in various classes of participating shares in a Segregated Portfolio Company, registered in the Cayman Islands. Cayman Islands is in the OECD white list of countries recognised by the Organisation for Economic Cooperation and Development for using international tax standards.
Hazem said: “1MDB is transparent and open about the placement of its funds. This was reported in the company’s annual return lodged with the Companies Commission of Malaysia.”
He added: “It is an interim measure until we identify suitable investment opportunities. The returns generated matches or exceeds the cost of financing.”
1MDB is considering investment opportunities in all of its core sectors, including global expansion when it supports strategic initiatives that will bring long-term benefits to Malaysia.
With our strategic partners, 1MDB can jointly explore opportunities internationally. This global platform is useful in forging further collaborations with energy players, such as investors, technology leaders and construction players from Japan, Germany and the Middle East.
For instance, Powertek Energy Sdn Bhd provides a launch pad for 1MDB to play a bigger role in the local and foreign energy markets, especially in South Asia and the Middle East.
Powertek is currently the biggest IPP in Egypt and Bangladesh, and also has a strong presence in Pakistan, Sri Lanka and the United Arab Emirates.
With the Kuala Langat Power Plant Sdn Bhd, which was recently awarded a 10-year extension to its concession by the Energy Commission after a competitive bidding process, 1MDB is the second largest independent power player in Malaysia. The Kuala Langat Plant’s PPA now extends to 2026.