Felda Global may sell Tradewinds stake

This is written by my colleague Zaidi Isham Ismail.

KUALA LUMPUR: FELDA Global Ventures Holdings Bhd (FGV) may sell its 20 per cent stake in Tradewinds (M) Bhd, worth an estimated RM551.5 million, to fund future land expansion.

FGV president and chief executive officer Datuk Sabri Ahmad said if the company decides to sell the stake, the proceeds will be used to fund upstream expansion, namely to buy more plantation land.

It is interesting to note that apart from being the largest crude palm oil producer in the world, FGV is also Malaysia’s Sugar King. In January 2010, FGV bought over Robert Kuok’s entire sugar business in Malaysia and a 20 per cent stake in Tradewinds (M) Bhd for RM1.8 billion.

"We will evaluate the situation and seek advice from investment banks. Then we will table the matter at the board of directors meeting next month," Sabri told Business Times over the weekend.

Sabri was commenting on Tan Sri Syed Mokhtar Al-Bukhary's plan to take Tradewinds private, of which, sources said, will be restructured into four separate entities - rubber, sugar, oil palm and rice.

Syed Mokhtar, a low-profile businessman and Malaysia's seventh richest man announced last week he is taking over Tradewinds by offering shareholders RM9.30 for every share he does not own in the company.

The whole deal is also expected to lead to the privatisation of Tradewinds Plantations Bhd and Padiberas Nasional Bhd (Bernas).It is expected to cost RM2.5 billion.

"I think it makes sense for FGV to sell the stake rather than keep it because at 20 per cent, FGV does not have management control over Tradewinds. With proceeds of over RM550 million, it is better for FGV to buy controlling stakes in many other companies," said a Tradewinds source, who declined to be named.

According to a news report last week, FGV is expected to reap a 188 per cent or RM390.2 million return on investment from its strategic acquisition in Tradewinds in January 2010. Should it decide to sell its entire stake in Tradewinds at RM9.30 a share, government-linked FGV stands to reap a windfall of RM551.5 million.

It was also reported from January 2010 to date, FGV has received net dividends amounting to RM46.3 million from its 20 per cent equity in Tradewinds.

FGV is one of Malaysia's largest plantation company and yet, it is a unique entity because it leases and manages 500,000ha of oil palm land for the country's 112,635 smallholders.