FGV listing set to raise RM10.5b

KUALA LUMPUR: FELDA Global Ventures Holdings Bhd’s (FGV) initial public offering (IPO) is poised to raise RM10.5 billion, of which some RM6 billion will go back to the Federal Land Development Authority (Felda). FGV’s listing on Bursa Malaysia’s main market is slated for June 28.

FGV group president Datuk Sabri Ahmad explained that at the beginning, Felda owns 100 per cent of FGV. 

“The IPO offers around 53 per cent of FGV for sale. Another 10 per cent will go to state governments. That leaves Felda with 37 per cent in FGV after the IPO,” he said. 

“Felda will then split the 37 per cent stakeholding; of which 17 per cent will be held via Felda Asset Holdings Company Sdn Bhd and 20 per cent with Tabung Amanah, a fund set up solely for the benefit of Felda settlers,” he added.

Sabri was speaking to reporters here yesterday after the launch of FGV’s IPO prospectus by Prime Minister Datuk Seri Najib Razak.

The prospectus stated that 52.5 per cent of FGV is being offered to the public. Institutional investors are expected to pay RM4.65 per share. The retail price, after completion of the institutional book building, will be 98 per cent ofthe institutional price, or RM4.55. Subscription for FGV’s shares opens to the public from 10am yesterday and closes at 5pm on June 12.

Twelve cornerstone investors are expected to pay close to RM4 billion for a 19.8 per cent stake in the company.

“Pahang, Sabah, Johor, Terengganu, Negri Sembilan and Perak governments will collectively take up more than 10 per cent in FGV,” said the group’s chairman Tan Sri Isa Samad. Some RM2 billion is estimated to be paid for that stake.

Isa then explained that the Pahang and Sabah state governments will each hold five per cent in FGV as “that is where most of FGV’s estates are located”.

CIMB Investment Bank Bhd chief executive officer Datuk Charon Wardini Mokhzani, who was also present at the prospectus launch, said FGV’s IPO is expected to raise RM10.5 billion.

Group president Sabri said of that total, RM6 billion will go to Felda and the remaining RM4.5 billion to FGV. “About half of the RM4.5 billion going to FGV will be for upstream expansion and the other half, for downstream development.”

The prospectus estimated that RM2.19 billion of the expected RM4.5 billion would be set aside to expand FGV’s plantation landbank over the next three years. "We see Indonesia as a strategic location for oil palm plantation expansion. As for rubber, we're conducting feasibility studies in Myanmar and Cambodia," he added.

Apart from landbank expansion, FGV plans to carry out aggressive replanting of its unproductive oil palms at 15,000ha per year. If this plan materialises, FGV is expected to achieve the ideal age profile for its oil palm plantations by 2025.

As at March 2012, there was 343,521ha of oil palm estates leased by Felda to FGV. The company has greenfield held under 95 per cent subsidiary PT Citra Niaga, which owns 14,385ha of agriculture land in west Kalimantan.

FGV's sugar business is held via its unit MSM Malaysia Holdings Bhd. Its refineries in Perlis and Penang are capable of producing 1.1 million tonnes of refined sugar a year. These are then packed and retailed under the brandnames "Gula Prai" and "Gula Perlis".

In the mid-term, Sabri said FGV intends to pay out at least half of the company's profits as dividends to shareholders.

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