Bandar Malaysia was conceived under 1MDB, and languished when the troubled state fund struggled to finance the development amid corruption investigations.

Iskandar Waterfront Holdings Sdn. Bhd. is considering an initial public offering as early as next year, partly to help fund the US$33.5 billion Bandar Malaysia project, according to people with knowledge of the matter.

The company known as IWH is working with at least one adviser for the listing that may fetch a valuation of about RM30 billion (US$7.2 billion), said one of the people, who asked not to be named because the information is private.

Bandar Malaysia was conceived under 1MDB, and languished when the troubled state fund struggled to finance the development amid corruption investigations.

1MDB then sought to sell a major stake in the project to developers IWH and China Railway Engineering Corp, before canceling the deal amid a dispute over payments in 2017.

In April, the government gave the developers another chance to revive the project in Kuala Lumpur.

A representative for IWH couldn’t immediately comment on the matter. Discussions are early and the company may decide not to proceed with the plan.

The fundraising would support construction of the property and transport hub that has drawn interest from Chinese tech giants Alibaba Group Holding Ltd. and Huawei Technologies Co.

The project was also set to be the hub for the now-suspended high speed rail that would connect Kuala Lumpur to Singapore.

Property Gloom

IWH holds a 60 per cent stake in IWH-CREC Sdn, the joint venture assigned to build Bandar Malaysia, with China Railway Engineering owning the rest.

The company controlled by Malaysian tycoon Lim Kang Hoo is the parent of listed real estate developer Iskandar Waterfront City Bhd, which surged as much as six per cent on Tuesday. The share price has more than doubled this year while Bursa Malaysia’s property index declined 10 per cent.

The IPO discussion comes as the real estate market struggles with persistent oversupply.

The country had about RM20 billion worth of unsold residential units in the first half, little changed from 2018. That has prompted the government to encourage more foreigners to buy property while calling for banks to lend more.