This article first appeared in The Edge Malaysia Weekly on September 15, 2025 - September 21, 2025

EARLIER this month, Khazanah Nasional Bhd locked in one of its most profitable investments in over a decade. It sold its shares in Farm Fresh Bhd (KL:FFB), paring its stake to just 3.02% in the dairy producer.

Sources indicate that the sovereign wealth fund is estimated to have made close to RM900 million from its 2011 bet on the dairy producer — a return that few of its other direct investments can match.

Khazanah ceased to be a substantial shareholder of Farm Fresh on Sept 4, after selling a block of 65 million shares, trimming its holdings to 3.02% from 6.49%. The disposal was carried out via its wholly-owned unit, Agrifood Resources Holdings Sdn Bhd. The move marks the near ending of a 14-year journey that began with the purchase of a 30% stake in Farm Fresh, then known as The Holstein Milk Company Sdn Bhd, for between RM18 million and RM20 million.

At the time, the investment was justified as part of efforts to advance the country’s food security and dairy self-sufficiency agenda.

Farm Fresh went public in 2022, in one of the year’s largest initial public offerings, raising about RM1 billion at an issue price of RM1.35 per share. The Main Market listing valued the Johor-based milk company at RM2.5 billion.

Since then, Khazanah’s initial 30% stake, and founder Loi Tuan Ee’s controlling 70%, have grown substantially in value. Today, Farm Fresh has a market capitalisation of close to RM4 billion, as its stock price hit a record high of RM2.10 last Thursday.

In fact, following the listing, Khazanah steadily pared down its holdings. In June this year, it disposed of 42.5 million shares, reducing its stake from 11.8% to 9.42%. Another 55 million shares were sold in July, followed by the latest 65 million share sale.

Cumulatively, Khazanah is understood to have realised between RM730 million and RM770 million from disposals representing roughly 27% of Farm Fresh’s equity.

If it were to sell its remaining 3% stake — currently worth more than RM110 million at market prices — its total proceeds since day one would be in the RM850 million to RM900 million range. That equates to about 45 times its initial outlay.

Asked to comment, Khazanah declined to disclose how much it invested in 2011 or the total gains realised. “The divestment is part of Khazanah’s ongoing efforts to rebalance our portfolio and repurpose our investment returns into new assets in Malaysia and globally, including new investments under Dana Impak,” Khazanah spokesperson said in a brief email reply. 

Loi, the 62-year-old managing director and CEO of Farm Fresh, has acknowledged in the past that Khazanah’s investment in 2011 “made a big difference” for the dairy firm, giving it access to more land and facilities to expand its business.

In an interview with The Edge in 2022, he said, “With Khazanah’s support, we managed to convince the government that it is possible to make this dairy business viable in pursuit of the national food security goals.”

Loi, who grew up in a small town in Perak, purchased a small parcel of land in Johor in 2010, and imported 60 Holstein Jersey cows from Australia to set up The Holstein Milk Company, which was later renamed Farm Fresh.

Through his family’s private vehicles, the farmer turned entrepreneur still owns the lion’s share or 40.1% equity interest in Farm Fresh. Its major institutional investors include Abrdn Malaysia Sdn Bhd (10.64%), Retirement Fund Inc (KWAP) and the Employees Provident Fund (8.8%).

Together with his siblings, Loi is now listed as the country’s 46th richest person, with a net worth of US$390 million (RM1.6 billion), according to Forbes’ list of Malaysia’s richest.

Farm Fresh itself has expanded into a nationwide brand with a workforce of over 1,500 people as at August.

For Khazanah, Farm Fresh has been an outperformer in its domestic equity portfolio. Global SWF last year ranked the fund among the world’s top performers after it delivered a 24.6% annual return, with Farm Fresh cited as one of its equities that outperformed in 2024.

It is also worth noting that Farm Fresh is one of the brighter spots in Khazanah’s domestic portfolio, which has seen its share of hits and misses. For instance, in 2023, Khazanah and Permodalan Nasional Bhd (PNB) sold their combined stake in e-commerce platform FashionValet Sdn Bhd for just RM3.1 million — a fraction of the RM47 million they had invested five years earlier.

The failed investment drew public criticism and triggered a review by the parliamentary Public Accounts Committee into Khazanah’s domestic investment governance and management. 

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