Bloomberg (01/09/2021) - Malaysia’s pilgrimage fund is considering taking its agricultural firm TH Plantations Bhd. private, people with knowledge of the matter said, amid a rally in palm oil prices.

Lembaga Tabung Haji has asked banks for proposals on the potential deal for the owner of palm oil and rubber plantations, one of the people said, asking not to be identified as the information is not public. 

Shares in TH Plantations have risen 4% in the year to date, giving it a market value of about 526 million ringgit ($127 million). Lembaga Tabung Haji owns 73.8% of the company.

Discussions are in the early stages and the fund could decide not to proceed, the people said. A spokesperson for Lembaga Tabung Haji said there was no such plan currently being considered, and declined to comment on details of the requested proposals.

The potential privatization of the Kuala Lumpur-headquartered firm comes after palm oil prices reached an all-time high in May, triggering a flurry of deal activity among Malaysian planters. 

Recent plantation deals:

Malaysia’s Boustead Said to Mull Options for Palm Oil Unit

Malaysia Palm Planter Soars on Rival’s $373 Million Takeover Bid

TSH Resources to Sell Plantation Assets in Sabah for 248M Rgt

NPC Resources Accepts IOI Corp’s Offer to Buy Palm Oil Land

Palm prices are expected to remain high due to lower production of palm oil and other oils, planters Sime Darby Plantation Bhd. and FGV Holdings Bhd. said this month following the release of their latest quarterly earnings. The challenges of meeting environmental, social and governance requirements around issues such as sustainability and labor rights are contributing to consolidation in the sector, according to analysts. 

Lembaga Tabung Haji was set up in 1963 to offer Sharia-compliant financial services for Islamic savers planning to make the hajj pilgrimage to Mecca, Saudi Arabia. The state-owned fund, which also offers logistical assistance for pilgrims, has about 9 million depositors and 123 branches, according to its website.

The Malaysian government in July announced plans to improve the fund’s management and operations, including a move to list it as a prescribed Islamic financial institution.

Read more at https://www.bloomberg.com/news/articles/2021-09-01/malaysia-pilgrim-fund-said-to-weigh-taking-palm-oil-firm-private