State-owned strategic development firm 1Malaysia Development Bhd (1MDB) said today it had acquired tycoon Ananda Krishnan's

Tanjong Energy Holdings Sdn Bhd for RM8.5 billion.

1MDB said it had signed a definitive agreement last Friday on the equity purchase, and that the transaction is now subject to customary financing and regulatory approvals.

"The acquisition signals the first step towards fulfilling 1MDB's strategic intent towards fulfilling the country's long-term energy security," 1MDB CEO Shahrol Halmi said in a statement.

"We are attracted to the strong operating track record of Tanjong Energy, its well-diversified portfolio of quality assets, its strong in-house capabilities and the potential for new growth both here and abroad," he added.

Shahrol said 1MDB aimed to "enhance the capacity of Tanjong Energy as a leading emerging market independent power producer."

ananda krishnan Krishnan, reckoned by Forbes to have assets of US$9.5 billion, owns his power assets through Tanjong Energy, which owns and operates eight power plants and has investments in five in Bangladesh, Egypt, Malaysia, Pakistan, Sri Lanka and the United Arab Emirates, with a total net generating capacity of 3,951MW.

Sources told Reuters on Monday that Krishnan was near a deal to sell his US$3 billion worth of power assets to government company as he seek to shed risky businesses.

1MDB said in a statement that Goldman Sachs advised it on the purchase. Standard Chartered is advising the seller.

- Reuters