By Khairie Hisyam
Fortune 500 company Prudential Financial is eyeing a move to Tun Razak Exchange (TRX), an upcoming financial district in Kuala Lumpur that is being developed by ailing 1Malaysia Development Bhd (1MDB).
Sources told KINIBIZ that Prudential is close to signing a tenancy agreement to occupy an office tower within the development, which would be customised to the company’s specifications.
TRX City Sdn Bhd, the developer and wholly-owned subsidiary of 1MDB, owns the office tower, sources said. Another international financial institution is also believed to be in talks with 1MDB over a similar move.
At publication time KINIBIZ is awaiting a response from Prudential. 1MDB president and group executive director Arul Kanda declined to talk about TRX as the larger 1MDB restructuring is ongoing.
TRX is an “iconic 70-acre development in the heart of Kuala Lumpur that is set to become a leading centre for international finance and business”, according to its website. It also has an estimated gross development value (GDV) of RM40 billion.
It is one of two property developments undertaken by 1MDB. The other is Bandar Malaysia, a 486-acre mixed-use development sited on the old airport at Sungai Besi and previously reported to have as much as RM150 billion in GDV.
The firm had been racking up borrowings it found difficult to service, with some RM42 billion in borrowings as at March 31, 2014, the latest available financial report. In February 2015, new president and group executive director Arul Kanda, who came in the month before, rolled out a rationalisation plan to turn the company around which aimed to monetise its assets while freezing new ventures.
The plan, among others, saw 1MDB ink an agreement on Dec 31, 2015 to sell 60% interest in Bandar Malaysia to a 60:40 consortium comprising Johor-linked Iskandar Waterfront Holdings (IWH) and Hong Kong-listed China Railway Group in a deal that will see 1MDB shed RM7.41 billion in debt one way or another.
The divestment followed the sale of its power assets held under Edra Global Energy for RM9.83 billion to China General Nuclear, which edged out a competing bid by Tenaga Nasional Bhd believed to be in the region of RM8 billion.
China General Nuclear is owned by the Chinese government, which also holds a major stake in China Railway Group.
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