Malaysian property developer S P Setia Bhd said on Friday it will buy privately held rival I&P Group for over 3.5 billion ringgit ($794.55 million) to create one of the country's largest real estate firms.

The indicative price for the proposed acquisition is estimated to be within the range of 3.5 billion ringgit to 3.75 billion ringgit, SP Setia said in a bourse statement.

Permodalan Nasional Bhd (PNB), a state investment fund and significant shareholder in both the companies, said it will provide the necessary capital support for the deal.

PNB owns 63.5 percent of SP Setia, according to Thomson Reuters data, while I&P Group is a wholly owned subsidiary of the fund.

"This combination will create the largest property company in Malaysia and one of the leading players, with a total land bank of close to 10,000 acres," PNB president and group chief executive Abdul Rahman Ahmad said.