Friday March 8, 2013

Abu Dhabi sovereign fund may invest significantly in Malaysia’s Tun Razak Exchange


PETALING JAYA: Aabar Investments PJSC, the Abu Dhabi-based sovereign fund, could be making a significant investment in Malaysia's Tun Razak Exchange (TRX), the ambitious multi-billion-ringgit property development project by 1Malaysia Development Bhd (1MDB), reliable sources told StarBiz.

Aabar, better known in Malaysia as the fund that bought the 25% stake in RHB Capital Bhd from its sister company Abu Dhabi Commercial Bank in 2011, is known internationally for its holdings in such high-profile names as German carmaker Daimler, commodities trader Glencore and Italy's UniCredit.

If Aabar's investment in TRX comes to fruition, then it would be a significant new foreign direct investment deal for Malaysia.

Aabar also has a significant real estate focus. Through its subsidiary, Aabar Properties LLC, the group is involved in real estate development, management and investment. It has a diverse portfolio including residential, commercial and hospitality projects, both in Abu Dhabi and internationally.

Aabar Properties is also involved in Abu Dhabi's most prestigious developments including IPIC Square, Reem Island, Al Raha Beach and Saraya.

Aabar Properties is currently focused on supporting Abu Dhabi's Vision 2030 by developing an extensive range of properties predominantly located in Abu Dhabi.

Aabar Investments also has about 22% in Arabtec, a Dubai-based construction company. Arabtec has worked on several prestigious projects, including the construction of the world's tallest building, the Burj Khalifa.

Last July, Prime Minister Datuk Seri Najib Tun Razak launched TRX as Kuala Lumpur's new financial district. TRX has an indicative gross development value of RM26bil.

TRX is expected to attract over 250 global companies, creating 500,000 jobs directly and indirectly, and is slated to become a global centre for international finance, trade and services.

TRX will be built on a 28.33-ha land off Jalan Tun Razak and will take 15 years to complete. 1MDB was reported to have been working with the regulators to relocate the Securities Commission and Bursa Malaysia to TRX.

It was reported that the first phase of development would kick off with prime Grade A office towers, offering a gross floor area of 750,000 sq ft to 1.2 million sq ft, depending on demand.

To attract foreign investment into TRX, the Government had said that some of the incentives to be introduced were an income tax exemption of 100% for 10 years, a stamp duty exemption on loan and service agreements, an industrial building allowance and an accelerated capital allowance for companies.

Property developers that qualify for the TRX project would also enjoy a 70% income tax exemption for five years.

With the first phase expected to be completed in 2016, the TRX will have offices, residences, retail space and public institutions. A 5.67ha park is also included in the heart of TRX.

When contacted, 1MDB said: “We have a policy to not comment on speculation and market rumours.”

Najib had said last year that a “strategic investor” for TRX had pledged RM3.5bil to construct the first phase. It was reported then that the Abu Dhabi government, via Mubadala Development Co, was the key strategic investor.

Coincidentally, Mubadala had, in October 2010, forged a collaboration with 1MDB with a view to explore joint key strategic projects in the Kuala Lumpur International Financial District or KLIFD, now known as TRX.

Hence, it isn't clear whether both Aabar and Mubadala would invest in TRX or just one of them.

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