20/04/2012 (Reuters) - A Malaysian farmers' investment cooperative (KPF) voted in favour of a $2 billion listing of a state-linked palm oil firm, a government minister said on Thursday, in the face of objections from the opposition.

Ahmad Mazlan, Minister in charge of the Federal Land Development Authority (FELDA), said that 88 percent of 1,250 representatives from the KPF had voted for the IPO at an extraordinary general meeting.

The FELDA Global Ventures (FGVH) listing, expected to be launched in June, will provide Malaysia's $27 billion palm oil sector with more financial firepower to beat off top producer Indonesia's and free up capital for the government.

The plan had triggered resistance from some of 113,000 farmers who together own a company called Felda Holdings that the government wants to inject into the IPO. They feared a loss of control in an asset they had invested in for generations.

"It went well," Ahmad told Reuters in a mobile phone text message after the meeting.

"The majority of the representatives agreed for KPF to sell their shareholding in Felda Holdings, for KPF to hold a 37 percent stake in FGVH after the listing and also gave a mandate for the FGVH board to restructure the enlarged entity (FGVH and Felda Holdings)."

FELDA, via FGVH, owns the rest of Felda Holdings that reported 2010 pre-tax profits of $252 million from processing palm fruits from the farmers and running the land authority's estates.

The government agency was started up in the 1950s to help Malays, the largest ethnic group in Malaysia, fight rural poverty. The farms expanded to 880,000 hectares, making it the world's biggest plantation scheme, with FELDA owning about 40 percent of the land bank.

The FELDA farmers make up most of the voters in 54 of Malaysia's 222 parliamentary seats. Prime Minister Najib Razak had spent weeks criss-crossing the country, trying to convince them of a one-off windfall from the IPO proceeds.

Najib is gearing up to call an election expected in June. He wants to reverse a dismal showing by his ruling coalition in 2008, when the opposition scored major gains.

DOES NOT REFLECT THE MAJORITY
While the first generation of FELDA farmers have traditionally supported the government, their children and the younger settlers oppose a plan to monetise the commercial entities of FELDA.

The group of farmers who had their injunction to stop the listing thrown out of court this month, said they would seek legal advice on contesting the validity of the EGM.

"We want to see if these is legal redress for this. We would like to file another injunction if that is possible," said Mazlan Aliman, president of Anak FELDA (Children of FELDA), an opposition-backed NGO that has supported this group of farmers.

"The 1,000 representatives in KPF do not reflect the majority of the settlers."

A group of eight farmers had earlier filed the injunction on concerns that the IPO will club Felda Holdings together with FGVH's loss-making overseas ventures, including a partnership with Dubai-based trading house IFFCO that struggles with poor refinery margins.

The young farmers, along with analysts, have feared a dilution in KPF's assets as FGVH will struggle to compete with Indonesian firms that enjoy strong margins, owing to a recent cut in export taxes for finished palm oil products.

This could bring down potential returns since Felda Holdings on its own has delivered average annual dividends of 14 percent over the past 30 years, making it one of the successes in Malaysia's decades-old affirmative action policy that favours majority ethnic Malays.