Malaysia's largest independent power producer Malakoff Corporation Bhd is lining up cornerstone investors, including domestic state funds, to pick up about 30 percent of its $740 million IPO, two sources with knowledge of the deal said.

The addition of cornerstone investors could smoothen the path for the long-delayed IPO, which is navigating tricky domestic markets as slumping global energy prices hit revenues of the oil exporter and have knocked the Malaysian ringgit to a six-year low.

Malakoff is targeting a listing in May, one source said, in what could be Malaysia's biggest IPO since 2012. "They are finalising sizing (for the cornerstone investors tranche)," the source said.

Malakoff executives were not immediately available to comment. The sources did not want to be named as the matter is confidential.

So-called cornerstone investors allow the underwriters to show potential institutional investors that the deal already has solid financial backing. In return, cornerstones receive preferential shares ahead of the IPO but are required to hold the stock for a certain period after the company is listed.

The IPO of Malakoff, a unit of port owner and construction firm MMC Corporation Bhd, would be Malaysia's largest since the $1.5 billion listing of pay TV firm Astro Malaysia Holdings Bhd in 2012, according to Thomson Reuters data.

MMC is controlled by Malaysia's eighth richest man, Syed Mokhtar Albukhary, according to Forbes.

In addition to funding Malakoff's growth, the proceeds of the listing will be used to cut MMC's borrowings and improve its capital structure, according to a draft prospectus filed to the Malaysian Securities Commission in January.

The issue will comprise 1.52 billion shares, of which 84 percent will be allocated for institutional investors and the balance for retail, according to the draft prospectus.

Malakoff is expected to have a market value of 9 billion ringgit based on an illustrative retail price of 1.80 ringgit per share, according to a circular from MMC on Mar. 14.

The firm has an effective capacity of 5,350 megawatt comprising six power plants that run on oil, coal and gas, according to its official website. It also owns a net capacity of about 690 megawatt of power production and 444,500 cubic meter per day of water desalination facility overseas, the website said.

Maybank Investment Bank is the principal adviser to MMC for the IPO. The listing has been postponed several times since 2012 mainly due to construction issues at one of its power plants.