30/04/2012 (The Star) -  Soon-to-be-listed Felda Global Ventures Holdings Bhd (FGVH) is planning for a bigger land bank and selective acquisitions in South-East Asia and Africa as well as selective downstream initiatives and new markets to strengthen its position as one of the leading global integrated agri-business players.

FGVH said in its draft exposure prospectus to the Securities Commission that the prospects of the group's primary businesses in plantations, downstream activities and sugar would depend on its ability to maintain market share, grow its sales, managing operating costs, and the condition of the local and global economy.

Currently, plantations is the top revenue generator on a pro-forma basis, accounting for 44% or RM3.2bil of the group's total revenue of RM7.5bil in financial year ended Dec 31, 2011 (FY2011). This is followed by sugar at RM2.3bil (30.7%) and downstream businesses at RM1.9bil (25.3%) respectively.

For FY2011, FGVH's net profit stood at RM1.01bil compared with RM844.43mil a year earlier.

Frost & Sullivan has pegged FGVH as the world's third largest oil palm plantation operator based on planted hectarage last year.

A labourer unloading sacks of sugar. Felda Holdings Bhd unit MSM Holdings Bhd is
the leading refined sugar producer in Malaysia. – Reuters

The group currently operates 343,521ha of oil palm plantations in Malaysia producing 5.2 million tonnes of fresh fruit bunches (FFB) last year. Its 49%-owned associate Felda Holdings Bhd is the world's largest producer of crude palm oil (CPO) producing 3.3 million tonnes last year.

Its subsidiary, MSM Holdings Bhd, which is listed on the Main Market of Bursa Malaysia, is the leading refined sugar producer in Malaysia.

FGVH will offer up to 2.19 billion shares under its initial public offering (IPO) scheduled for end-May or early June.

The total IPO shares comprise an offer for sale by the Federal Land Development Authority (Felda) of up to 1.21 billion shares to local and foreign institutional and selected investors, and a public issue of up to 980 million shares.

Of the public issue shares, 286.8 million will be offered to local and foreign institutional and selected investors; 419.5 million to bumiputra institutional and selected investors approved by the International Trade and Industry Ministry; 200.6 million to eligible employees, Felda settlers and individuals who have contributed to the success of the group; and 72.9 million to the Malaysian public.

The prices for the FGVH IPO shares, however, have yet to be determined.

The draft exposure also unveiled the corporate structure of FGVH whereby Felda currently has a 76.8% stake in FGVH while Felda Asset Holdings Company Sdn Bhd (FAHC) has a 23.2% stake in FGVH.

FGVH said in its draft prospectus that the offering and sale of up to 2.19 billion IPO shares would see up to 60% of its shares publicly held by investors participating in its IPO, while 17% of its issued and paid-up share capital would be held by FAHC and 23% by Felda.

A source close to Felda when contacted by StarBiz could not verify whether FAHC is the “special purpose vehicle” announced by Felda chairman Tan Sri Isa Samad that was created to take care of Felda settlers' interest in FGVH post-listing, following the exclusion of its cooperative, Koperasi Permodalan Felda Malaysia Bhd (KPF) as a major shareholder in the IPO.

Meanwhile, Bloomberg last Friday reported that FGVH might raise as much as US$3.3bil in Asia's biggest IPO since February 2011.

FGVH would start marketing shares to institutions as early as next month, said one of the people quoted in the Bloomberg report, who declined to be named as the information is private.

FGVH is going public “to gain better access to cost-effective funding from the equity capital market and to have greater financial flexibility to pursue future expansion and growth opportunities,” said its prospectus.

CIMB Investment Bank Bhd and Maybank Investment Bank Bhd were appointed as lead managers of the IPO, helped by other banks including Morgan Stanley, FGVH said.