12/03/2012 (The Star) - Felda Global Ventures Holdings Bhd (FGVH) and its partners are looking to sell their controlling 17% stake in Australian Agricultural Co Ltd (AAco), the largest beef-cattle producing company Down Under, sources said.

“The block has been up for sale for some time now, and FGVH hopes to conclude the sale before its planned initial public offering,” the source said.

The reason for the sale, however, is not clear. The company that holds the 17% block in AACo is Iffco Poultry Co Sdn Bhd, which in turn is 50% owned by FGVH, 28% by Iffco Oil Holdings Ltd and 22% by Middle East Oils and Grains Ltd.

Felda and Dubai-based Iffco International have been in partnership for the past few years, mainly in the oil palm downstream activities.

FGVH group president Datuk Sabri Ahmad sits on the board of AACo and so does one Arunas Paliulis, who is also the commodity risk director of the Iffco Poultry group of companies.

Australia-listed AAco now trades at around A$1.30 per share, with a market capitalisation of A$410mil (RM1.3bil), giving Iffco Poultry's stake a market value of around A$70mil (RM223mil).

Iffco Poultry had acquired the AAco stake in 2009 for about A$1.70 a share. However, due to the significant change in the exchange rates, Iffco Poultry stood to enjoy a gain on disposal of close to RM200mil, sources said.

FGVH declined to comment for this article.

AAco has over seven million hectares of mostly grazing land. It runs a herd of half a million head of cattle, processed for a range of uses from prime cuts for restaurants to processed meat for supermarkets. It reported a net profit of A$10.5mil for the 2011 financial year, up from A$904,000 in 2010, despite having to contend with the prospect of Indonesia, a key export market, cutting the supply of meat from Australia.

AAco sold more than 80,000 live cattle for export, versus 76,000 the previous year.

Indonesia had banned the import of live cattle from Australia last year and said it would reduce imports of beef from Australia, but the two countries are working to repair the damaged trade relationship, it has been reported.

AAco also said it was pursuing opportunities in other South-East Asian markets including Vietnam and the Philippines, and increasing exports to Europe.