KUALA LUMPUR – Malaysian Prime Minister Najib Razak yesterday unveiled the planned US$3.3 billion (S$4.2 billion) listing of palm oil giant Felda this month, paving the way for Asia’s largest initial public offering (IPO) so far this year that could also lift his chances of winning a national election.
He released the prospectus for the IPO of Felda Global Ventures Holdings at an event in Kuala Lumpur that was as much political theatre as a financial announcement.
The listing is expected to raise US$3.3 billion based on the price for retail investors of RM4.55 (S$1.85) per share, giving it a market capitalisation of more than RM16 billion.
“The reason for the listing is to create wealth for Malaysians,” Mr Najib said in a speech. “There is no other way to create wealth in such a fast pace than listing.”
The world’s largest IPO this year after Facebook has already attracted a strong cast of cornerstone investors, including French agribusiness giant Louis Dreyfus, Fidelity Investments and Middle Eastern sovereign fund Qatar Holding.
That partly reflects strong investor interest in South-east Asia, which has seen a burst of IPOs since the start of the year despite the protracted euro zone debt crisis, the debacle over Facebook’s market debut and shaky IPO markets elsewhere in Asia.
The strong support from cornerstones, which are taking up about two-thirds of the IPO shares, and from Malaysian states in which the plantations are located means the deal is unlikely to suffer the same fate as the social networking giant or the flurry of Hong Kong share sales that have been shelved recently.
There is also significant political capital invested in the sale, which is set to deliver a windfall totalling more than US$500 million to tens of thousands of farmers in what is likely to be an election year.
“So far, there has not been a single major IPO being pulled in Malaysia last year and this year,” said Mr Alan Tan, fund manager for Asian equities at Lion Global Investors in Singapore. “Felda is also government-owned, so the chance of it being successfully listed is quite high.”
Felda chief executive Sabri Ahmad brushed aside concerns over weakness in global stock markets, saying emerging nations in Asia were an attractive option for investors.
“This is safe haven. This is a good asset and we have a good track record,” he said at a news conference.
Felda was set up by the government in the 1950s as part of a rural development plan to alleviate poverty by giving poor Malays land to grow cash crops, mainly palm oil and rubber. The farmers are mainly ethnic Malay Muslims, who make up about two-thirds of Malaysia’s 28 million people. Agencies
The Felda group owns 70 palm oil mills, seven refineries, as well as a string of other manufacturing plants nationwide.
It produces about 3 million tonnes of crude palm oil annually, or about 8 per cent of world output.
Felda Global is expected to overtake Malaysian conglomerate Sime Darby as the world’s largest listed plantation group.
Proceeds from the IPO will be used to boost Felda’s expansion in South-east Asia and Africa.