27/06/2012 (Bernama) - The world's second largest initial public offering (IPO), Felda Global Ventures Holdings Bhd's (FGVH) share price is expected to exceed RM5 upon listing on Thursday, an analyst says Tuesday.

Based on the retail offering price of RM4.45 per share, this would be a boon for settlers who stand to gain handsomely from the expected premium given the current bearish market sentiment.

InterPacific Research Head Pong Teng Siew said the local market condition is favourable for FGVH listing as external woes have minimal impact on the local bourse.

"The backdrop is not the best time for this, however the local market is doing reasonably well currently.

"Yesterday, the FBM KLCI hit an all-time high of 1,611.5, so a bit of profit taking expected this week shouldn't be anything to be worried about as it's quite natural," he told Bernama.

He said the FBM KLCI is set to sustain its resilience despite uncertainties in the global economy, thus the FGVH listing would take-off positively.

FGVH is seeking a listing with an enlarged share capital of 3.6 billion shares of RM1 each and the company is entering the market with a market capitalisation of RM16.2 billion.

"The size of the issue itself has its pros and cons. The big size opens up for large investment institutions to come on board, while on the other hand it locks up some of the liquidity on the local market," he added.

Meanwhile, PublicInvest Research, which initiated an outperform call for FGVH, believed the impending listing would help re-rate the valuations and provide renewed catalysts to the entire market.

The world's third largest plantation company has a strong net cash position of RM3 billion upon its listing.

The research house expected healthier financial position given the proceeds from the IPO and stronger operating cash flows.

However, among the risk factors said were crude palm oil prices fluctuation, termination of land-lease agreements, high dependency on associate, Felda Holdings Bhd for various aspects of operations, fluctuation in exchange rates and change in export policies, it said.