Shares in Malaysian power firm Tenaga Nasional Bhd, fell today after it said it wanted to buy almost all of debt-laden state fund 1MDB's energy assets, adding to fears that it may overpay for the power plants.
1MDB, the centre of several investigations over its management of funds, is seeking to offload its Edra energy unit assets to pare down US$11 billion of debt. Analysts have voiced concern that suitors for those assets could pay too much if the government pushes for the fund to gain the best deal it can.
Tenaga, the country's national utility, had previously flagged its plans to purchase 1MDB's 70 percent stake in 3B, a greenfield coal-fired plant which is seen as the best of 1MDB's assets. At the time Tenaga's CEO rejected accusations that his company was bailing out 1MDB and said he would not be paying a premium.
"Our concern is premised on Edra having overpaid for these assets in the past and the holding company's need to deleverage," AffinHwang Capital said in a research note today.
Tenaga's shares were down 1.6 percent in this morning's trade after falling as much as 3.3 percent earlier. They have lost 5.5 percent since mid-June when Tenaga said it would buy the stake in the greenfield coal-fired plant.
1MDB, whose advisory board is chaired by Prime Minister Najib Razak, has 14 power assets which could be worth up to RM18 billion (US$4.73 billion), sources told Reuters in June.
This month Malaysian police raided 1MDB's office, following a report that claimed investigators looking into the firm found nearly US$700 million had been transferred to the prime minister's bank account.
Najib has denied taking any money for personal gain and said the corruption allegations are part of a malicious campaign to force him out of office.