In what would be the country's largest initial public offering (IPO) in a decade, TNB Power Generation Sdn Bhd, known as TNB Genco, could be valued at about $4 billion, the sources said, declining to be named owing to the confidential nature of the matter.

Tenaga, which counts Malaysia's sovereign wealth fund Khazanah Nasional Bhd as its biggest shareholder, said the company has been exploring various initiatives to boost shareholder value, including a potential listing of TNB Genco.

(Reporting by Yantoultra Ngui; Editing by Sumeet Chatterjee and David Goodman)