By KINIBIZ
1Malaysia Development Bhd’s (1MDB) failure to list Edra Energy Global Bhd last year resulted in cash flow problems for the group and is the reason it is in its current predicament today, said 1MDB chairman Lodin Wok Kamaruddin.
Lodin Wok Kamaruddin
Speaking to the Business Times, Lodin said that if 1MDB had been successful in listing its energy assets in 2014, things would have turned out differently for the strategic development fund. He said that “had the initial public offering gone ahead, it would have strengthened 1MDB’s cash flow.”
According to Lodin the listing was postponed because the group “wanted to obtain Track 3B (a 2,000 MW coal-fired power plant project) and all the necessary approvals for the listing. The timing was also not right to launch the IPO because of weak market sentiment and the volatile stock market.”
Lodin said the fund’s plans had always been to venture into property development and energy generation from the start. He said “1MDB is basically involved in long-term investments. With the little money we had as paid-up capital totalling RM1 million when we started in 2009, we had to borrow from banks to build the business in Malaysia and overseas.
“We had always planned to venture into property development and energy from the start. These are long-term projects where you do not get returns immediately. So because of that, there is a big mismatch of cash flow currently as we are investing but the returns are not immediate,” he said.
Lodin said he regretted there was a wrong perception of 1MDB and that people are not seeing the true value of 1MDB.
He said “I am sorry that there is a wrong perception of 1MDB. People do not see the true value of 1MDB and how we have invested. 1MDB, through Edra, has 15 independent power producers (IPP) in Malaysia, Pakistan, Egypt and Bangladesh with a collective 5,500 MW capacity. Compared with Malakoff Corp which only has 5,300 MW capacity, we are bigger.”
Lodin said that listing Edra on Bursa Malaysia remains on the agenda for 1MDB, in order to raise cash for expansion and reduce its borrowings. 1MDB has said it aims to raise about RM11 billion from the IPO.
Arul Kanda
In February, 1MDB’s president and group executive director Arul Kanda said that Edra would be monetised in 2015 with a portion of the proceeds being invested in the business or future growth and the remainder going towards the repayment of 1MDB’s short term debt.
Then in a surprise move in late March, the Finance Ministry appointed CIMB Group to advise it on the potential sale of Edra to strategic investors. However a week later the ministry dropped CIMB Group as advisor after it decided it would no longer consider such a sale, but would pursue a listing on the bourse.
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