Malaysia’s sovereign fund forms $2.5bn Saudi JV

The newly formed 1Malaysia Development Berhad has teamed up with Saudi-backed investment company PetroSaudi to co-invest in Malaysian projects.

1Malaysia Development Berhad, the sovereign wealth fund launched this year by the Government of Malaysia to co-invest in alternative assets, has formed a $2.5 billion joint venture to target Malaysia with Saudi investment house, PetroSaudi International.

The fund said the joint venture “will initiate various projects in multiple sectors which are mutually beneficial as well as in line with 1MDB's mission to drive long-term sustainable economic development in Malaysia”.

1Malaysia was formed out of Malysia’s first sovereign wealth fund, The Terengganu Investment Authority, to team up with partners on an “equal capital” basis to invest in assets that generate high returns. Target sectors include energy, real estate, tourism and agribusiness. It was formerly known as the Terengganu Investment Authority.

The fund was set up with initial funding of RM11 billion ($3.13 billion), part of which was raised through the issue of Islamic medium-term notes guaranteed by the US Federal Government.

According to the 1Malaysia announcement, PetroSaudi International is a private company mandated to invest in assets which can “strengthen the relationships between the Kingdom of Saudi Arabia and key countries worldwide”.