Alinta Energy Holdings Ptd Ltd, the Australian power producer controlled by TPG Capital, has drawn interest from Asian companies including Malakoff Corp  Bhd  and  Keppel  Infrastructure  Trust,  people  with  knowledge  of  the matter  said.  Malakoff  may  seek  to  bid  together  with  the  Employees Provident Fund (EPF), one of the people said. The utility may fetch more than  A$4bn  (RM11.7bn),  they  said.  TPG’s  adviser  Lazard  Ltd  had  also reached out to potential buyers including Marubeni Corp and Tokyo Electric Power Co and would send detailed information on the business around the end  of  the  month,  two  of  the  people  said.  TPG’s  adviser  last  year  sent limited  information  to  potential  buyers  on  the  business,  which  has  annual EBITDA of about A$350m (RM1.03bn), the people said. Alinta operates 10 power stations in Australia and New Zealand as well as transmission lines, natural gas pipelines and an energy retailing unit, according to its website. (Source: StarBiz)

Comment:  We are neutral on this development. While growing its regional portfolio  is  positive,  we  believe  gearing  may  still  be  an  issue  for  Malakoff (51%  owned  by  MMC),  which  we  estimate  to  be  at  roughly  4x  on  gross debt/equity basis even after paring down debt upon re-listing. Based  on the draft prospectus released on the Securities Commission website earlier this month, we note that Malakoff intends to use 90% of the listing proceeds to fully  redeem  the  Junior  Sukuk  Musharakah  (estimated  to  be  worth RM1.7bn) while only 5% will be used for business expansion. Therefore, a tie-up with EPF would be a sensible option as it would reduce the financial burden on Malakoff if a joint bid is successful. No change to our Buy rating on MMC with TP of RM3.20.

Source: Affin Hwang Capital Research - 20 Jan 2015