KUALA LUMPUR: Felda Global Ventures Holdings Bhd (FGVHH), which is expected to raise RM10.5 billion based on the indicative retail offer price of RM4.55 per share, launched its IPO prospectus yesterday.

FGVH, which is offering up to 2.2 billion shares in its listing exercise, will make its debut on Bursa Malaysia on June 28.

Prime Minister Datuk Seri Najib Razak said in his speech that the listing of FGVH will see the group to make a “quantum leap” or lonjakan berganda as market demand for the company’s shares raises the value of its assets.

The liquidity and feasibility of the exercise are expected to attract local and foreign institutional investors, Najib said.

“We want to create wealth and I hope FGVH’s IPO will perform better than Facebook Inc’s listing exercise,” he quipped, referring to the share price performance of the world’s largest IPO this year.  

Facebook has fallen 26% to US$28.19 from its IPO price of US$38 per share.

FGVH’s IPO is the second largest after Facebook and the largest in Asia this year. It is the largest in Malaysia since Petronas Chemicals Group Bhd’s listing in November 2010.

The listing of FGVH is deemed pivotal to spearhead its global expansion.

According to the prospectus, the offer for sale of 1.2 billion shares will raise RM5.5 billion (based on the retail offer price of RM4.55 per share) for the selling shareholder while the public issue of 980 million shares will raise RM4.5 billion for FGVH. The final retail price will be either RM4.55 or 98% of the institutional price, whichever is lower.

President and CEO Datuk Sabri Ahmad said FGVH will use the proceeds to finance the expansion of its upstream and downstream operations. Upon listing this June 28, FGVH will have a market capaitalisation of RM16.6 billion based on its expanded issue base of 3.65 billion shares.  

“We [FGVH] are focusing on organic and inorganic growth,” Sabri said.

Organic growth will involve oil palm replanting schemes, he said, while inorganic expansion will see the company embarking on mergers and acquisitions.

In the upstream segment, FGVH plans to undertake oil palm replanting programmes involving some 15,000ha a year and acquisition of land across Southeast Asia and Africa for oil palm and rubber plantation operations, he said.

In Southeast Asia, Sabri said FGVH may acquire land in Indonesia, Cambodia and Myanmar.

“The expansion in Southeast Asia is immediate,” he said, but declined to specify which African countries the company hopes to venture into. He only indicated that the African ventures constitute the second phase of FGVH’s geographical expansion which will happen within three to five years.

He said FGVH also plans to acquire more refineries and logistics assets to grow its downstream operations which are weaker than those of other major global plantation firms.

According to the company’s prospectus, FGVH’s major downstream plans include expediting the rejuvenation of its operations in Canada. The firm wholly owns a soya bean and canola crushing and refining facility there.

FGVH is the commercial arm of the Federal Land Development Authority (Felda), which was set up in 1956 under the Land Development Ordinance and given a social-economic mandate to open up new agricultural land for cultivation by landless settlers.

Felda chairman Tan Sri Mohamed Isa Abdul Samad said 20% of FGVH will be held in a trust fund to ensure that its estimated 112,000 settlers continue to benefit from the listed entity.

He said the trust fund will equity account profit of FGVH in proportion to its stake, and the dividends will be disbursed to settlers. The 20% stake forms a portion of the 37% stake held by Felda post-listing. According to Isa, Felda will hold the remaining 17%.

“The arrangement will benefit the present and future generations of settlers,” Isa told reporters at the launch of FGVH’s  prospectus.

The arrangement is crucial as Koperasi Permodalan Felda (KPF) the cooperative unit of Felda settlers and employees, will not be involved in FGVH’s IPO.

This follows opposition to FGVH’s listing by parties aligned to disgruntled Felda settlers over an initial scheme which called for KPF to swap its 51% stake in Felda Holdings Bhd for 37% equity interest in FGVH.

FGVH holds the remaining 49% in Felda Holdings, in which Felda’s strategic domestic plantation and agricultural assets and businesses are parked. Najib said Felda settlers have to view the listing of FGVH positively as the exercise is expected to improve their livelihood. He also expressed hope that the settlers will “hold on to their FGVH shares” to reap the long-term economic and financial benefits from the listing.

In conjunction with the exercise, the prime minister said the government will disburse the second tranche of its cash payout scheme to settlers on July 7. The windfall of RM15,000 per family, announced last month, will be paid in three tranches of RM5,000 each.  

Cornerstone investors in the listing include Permodalan Nasional Bhd, Lembaga Tabung Haji, Employees Provident Fund, Kumpulan Wang Persaraan (Diperbadankan), Value Partners and Qatar Investment, who have committed to subscribe for 723.5 million shares with a six-month lock-up period.

This article appeared in The Edge Financial Daily, June 1, 2012.