Bloomberg News

Felda Said to Seek $3.2 Billion in Malaysian Share Sale

May 30, 2012

Felda Global Ventures Holdings Bhd. may raise as much as 10.2 billion ringgit ($3.2 billion) in an initial public offering in Kuala Lumpur, two people with knowledge of the matter said.

The Malaysian palm oil and rubber producer fixed a price range of between 4 ringgit and 4.65 ringgit apiece after a meeting today, said the people who declined to be identified because the information was private. Felda declined to comment in a statement to Bloomberg News, saying the final price will be determined at a later date.

The Kuala Lumpur-based company is attempting this year’s second-biggest IPO after Facebook Inc. (FB:US) as concerns about a possible Greek exit from the euro drive stocks lower worldwide. Malaysian stocks have withstood the global selloff, with the FTSE Bursa Malaysia KLCI Index (FBMKLCI) little changed so far this month compared with a 10 percent drop in the MSCI Asia Pacific Index.

“The stock is in high demand,” said Scott Lim, who manages 380 million ringgit as chief executive officer of Kuala Lumpur-based MIDF Amanah Asset Management Bhd. “Investors are still optimistic about commodities globally.”

Felda Global manages estates for the Federal Land Development Authority, a Malaysian government agency. Kuala Lumpur-based Felda Global has about 355,864 hectares (878,984 acres) of plantations in Malaysia in addition to land in Indonesia. It also has palm oil refining businesses in China, Indonesia, Turkey and South Africa, according to a draft prospectus issued April 26.

Bigger IPOs

Malaysian Prime Minister Najib Razak will unveil the IPO prospectus tomorrow. The IPO comprises 2.19 billion shares, according to the listing document.

Felda Global plans to use proceeds to buy plantation assets as well as to build or purchase mills and refineries. The company will also target acquisitions of oil and fats, manufacturing and logistic businesses, it said.

The offering follows calls by Najib for large Malaysian companies to list to attract global investors. At 10.2 billion ringgit, it will be the Southeast Asian nation’s biggest share sale since Petronas Chemicals Group Bhd. (PCHEM) raised a record 12.8 billion ringgit in 2010, according to data compiled by Bloomberg.

It will be the second largest IPO this year globally, after Facebook raised $16 billion this month. Facebook has dropped 24 percent since its May 18 debut.

“It’s probably unlikely to be a Facebook IPO,” Alan Richardson, who helps oversee about $87 billion as a money manager at Samsung Asset Management in Singapore, said by phone. “I think it’ll be successful. Foreigners are finding it difficult to get allocation.” He’d be interested in buying the stock at the right price, he said.

Cornerstone Investors

Louis Dreyfus Holding BV, a Dutch commodities group, agreed to pay about $150 million for a 2.5 percent stake in Felda Global ahead of the share sale, two people with knowledge of the matter said on May 15. Fidelity Investments, Hong Kong’s Value Partners Group Ltd. and Malaysian billionaire Quek Leng Chan are also among so-called cornerstone investors in the IPO, the Edge newspaper reported on May 16, citing unidentified people familiar with the matter.

Cornerstone investors typically agree to hold shares for a specified period of time in exchange for a guaranteed allocation in an IPO.

Some shares will be distributed to Malaysian state governments and local institutions including Lembaga Tabung Haji and Permodalan Nasional Bhd., state news service Bernama reported on May 27, citing Felda Global’s chairman.

The company boosted profit 1 percent to 942.2 million ringgit last year, according to its preliminary prospectus. Sales advanced 29 percent to 7.5 billion ringgit. Felda Global plans to pay half of its profit as dividend, the document shows.

Morgan Stanley, CIMB Investment Bank Bhd. and Maybank Investment Bank Bhd. are managing the offering, according to the draft prospectus.

To contact the reporters on this story: Chong Pooi Koon in Kuala Lumpur at pchong17@bloomberg.net; Chan Tien Hin in Kuala Lumpur at thchan@bloomberg.net

To contact the editors responsible for this story: Barry Porter in Kuala Lumpur at bporter10@bloomberg.net; Philip Lagerkranser in Hong Kong at lagerkranser@bloomberg.net


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