13/12/2007 (Financial Times) - New Britain Palm Oil is to raise £89m in a London flotation, taking advantage of a surge in demand for cooking oil and biofuels derived from palm trees.

The placing, fully underwritten by Kaupthing Singer & Friedlander, will value the company at £362m, almost twice that of MP Evans, currently the largest palm oil planter traded in London.

Trading is expected to commence on Monday.

Demand from China and India for palm-based cooking oil is particularly strong while concerns about global warming are pushing the rapid escalation of biofuel use. The market value of the three palm oil specialists currently listed in London has risen by between 23 and 30 per cent this year.

New Britain has 40,000 hectares under cultivation in Papua New Guinea. It plans to double this within eight years using funds from the float. Alan Chaytor, executive director and controller of more than 5 per cent of New Britain’s equity, said there would be opportunities to acquire smaller Papua New Guinea producers.

The industry is in consolidation mode with recent mergers in Malaysia and Singapore. The lead-in time of several years until plants mature is a barrier to new entrants and may have played a part in the decision of Asian Palm Oil not to list on Aim in the autumn.

Mr Chaytor said New Britain focused on sales into the European Union food manufacturing market. It benefits from import duty exemptions and from being able to demonstrate traceability of its produce back to seed.

First-half turnover rose 56 per cent to $106m (£52m) with post-tax profits sharply up at $57m.

The majority shareholder is Kulim, a Malaysian conglomerate that holds a 50.7 per cent stake. Kulim said it would invest $70m in its palm oil interests in Malaysia and Papua New Guinea after selling up in Indonesia.

The crude palm oil spot price in Rotterdam on Wednesday was about $933 a tonne and New Britain said its cost of production was $262 a tonne.