KUALA LUMPUR, April 16 — Malakoff Corporation Bhd , Malaysia’s largest independent power firm, set a tight bookbuilding range for its initial public offering, two people with direct knowledge of the process said, with solid support from domestic cornerstone investors.

The top end of the range set today values the IPO at up to RM2.74 billion, the largest in Malaysia in almost three years. The people declined to be identified because they are not authorised to speak to the media.

The listing comes as many Malaysian companies, susceptible to significant volatility in energy prices and the ringgit, opt against embarking on IPOs, for fear that volatility could squeeze their valuations.

The IPO also serves as a gauge of investor sentiment on the planned US$3 billion (RM11.02 billion) IPO of the Edra Global Energy Bhd power unit of indebted Malaysian state investor 1MDB’s, bankers have said. Edra Global is a direct and smaller competitor of Malakoff.

Malakoff, a subsidiary of conglomerate MMC Corporation Bhd , set an indicative price range of 1.75 ringgit to 1.80 ringgit per share, a day before it launches its official prospectus to investors.

A Malakoff official declined to comment.

Proceeds of the IPO will be used to fund Malakoff’s growth, as well as cut MMC’s debt and improve its capital structure, according to a draft prospectus filed in January to the Malaysian Securities Commission.

The sale will comprise 1.52 billion shares, with 84 per cent set aside for institutional investors and the rest for retail investors, according to the draft prospectus.

At least nine cornerstone investors - including Corston-Smith Asset Management, Eastspring Investments and Pilgrims Fund Board — will buy about 30 per cent of the total offering, people with knowledge of the matter said earlier this month.

Malayan Banking Bhd is the IPO’s transaction manager, as well as joint global co-ordinator with CIMB Group Holdings Bhd, Credit Suisse Group AG and JP Morgan AG. Bank of America Merrill Lynch, Deutsche Bank AG, HSBC, Morgan Stanley, Nomura and RHB Capital Bhd are the joint bookrunners. — Reuters