1Malaysia
Development Bhd’s push into the property sector is raising concerns
about the company’s rising debt and a possible commercial property glut
in KL.
When
it was first set up, 1MDB’s initial capital of RM5bn was raised from
30-year bonds. About RM3.5bn of this was invested in PetroSaudi. It
later sold this for RM4.2bn and invested in Murabaha notes.
The Edge weekly
(6 August) reported that 1MDB’s total loans and borrowings rose to
RM6.8bn (31 March 2011) from RM4.4bn a year earlier. 1MDB then piled on
further debt of RM11bn to finance its investment in the energy sector
including buying up Ananda Krishnan’s Tanjung assets for a hefty
RM8.5bn. (It is now eyeing the energy assets of Genting, Sime Darby and
Bukhary’s Malakoff, reports The Edge).
The
company is involved in the 70-acre RM26bn Tun Razak Exchange (or TRX –
previously known as the KL International Financial District) – 25
buildings and a new stock exchange – 20m square feet of floor area. It
is supposed to serve as a financial services regional hub.
The Edge also
reported the firm had pumped in RM194m into properties (70 acres for
TRX and 484 acres of the Sungai Besi air force base in KL) but these are
now revalued at RM826m! How did this happen?
Both
TRX and Bandar Malaysia will require RM5.4bn funding for the first
phase. Now where is 1MDB going to raise the money from? The government
or state-managed funds?
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