04/05/2012 (Wall Street Journal) - The Malaysian government Thursday said Felda Global Ventures Holdings Bhd. is seeking to offer MYR4.65 a share to indigenous Malaysians ahead of the palm-oil plantation company's initial public offering, a deal if successful will make the more than $3 billion IPO the world's second largest offering so far this year after Facebook Inc.

A government notice Thursday said that Felda plans to allot 419.5 million shares to Bumiputera or Indigenous Malays and other ethnic minorities. Typically IPOs in Malaysia allot a portion of the shares to indigenous Malays as part of the country's affirmative action policy. No details about how much will be allocated to other investors—both non Bumiputeras or institutional investors—were released in the government notice, but a person familiar with the situation Thursday said that the price range for them will be released in a few weeks, after the premarketing process that starts next week.

The premarketing process in an IPO is where bankers test investor appetite for the deal and come up with a price band.

State-owned Felda said in its draft prospectus filed with Malaysia's Securities Commission last week that it plans to sell up to 2.19 billion shares, made up of 980 million new shares and up to 1.21 billion shares for listing on the Bursa Malaysia stock exchange. The 2.19 billion shares includes the 419.5 million share being offered to Bumiputera's.

If the MYR4.65 per share was allotted to the other investors in the IPO, the total deal comprising 2.19 billion shares would raise US$3.3 billion

At a fundraising size of over $3 billion, Felda Global's fundraising could be the world's second-biggest IPO this year after the highly anticipated $10 billion IPO of social networking site Facebook, which according to people familiar with the matter is likely to debut on May 18.

Felda's IPO will also be the third-largest IPO in Malaysia after state-oil firm Petroliam Nasional Bhd's unit Petronas Chemicals Group Bhd. raised $4.14 billion in late 2010, and Maxis Bhd raised around $3.5 billion in a 2009 offering.

A person familiar with the deal said last week that Felda Global has already started talks with potential cornerstone investors, who are investors that buy into an IPO and agree not to sell for a certain period of time after listing. The IPO also comes at a time when markets have become choppy following a recent set of poor data from the U.S. and the Europe that have revived concerns about the global economic outlook.

Felda's planned listing has been months in the making. Malaysia's Prime Minister Najib Razak had announced last October that his government plans to list Felda Global by mid-2012 to raise funds "for the company to be a global conglomerate" and is part of the government's strategy to deepen Malaysia's equities market.

Felda Global currently manages 850,000 hectares of plantation land in Malaysia and accounts for around 18% of the country's total palm oil output, making it the biggest palm oil producer by plantation acreage. While 300,000 hectares of this is directly owned by Felda Global, another 500,000 hectares is managed on behalf of small holders who own the land.

CIMB Investment Bank and Maybank Investment Bank are the joint principal advisers. It has also hired CIMB Investment Bank, Deutche Bank AG, JP Morgan Securities Ltd., Maybank Investment Bank and Morgan Stanley & Co as joint bookrunners for the institutional offering.