Felda Said to Seek $3.2 Billion in Malaysian Share Sale

Felda Global Ventures Holdings Bhd. may raise as much as 10.2 billion ringgit ($3.2 billion) in an initial public offering in Kuala Lumpur, two people with knowledge of the matter said.

The Kuala Lumpur-based company is attempting this year’s second-biggest IPO after Facebook Inc. (FB) even as other Asian initial public offerings get pulled or trimmed amid adverse market conditions. Graff Diamonds Corp., the London-based jeweler, postponed a $1 billion IPO in Hong Kong today.

Felda Global, a Malaysian palm oil and rubber producer, fixed a price range of between 4 ringgit and 4.65 ringgit a share yesterday, said the people who declined to be named as the information is private. It has signed up 12 so-called cornerstone investors, including local pension funds, to take up 19.8 percent of its enlarged share capital, according to a term sheet obtained by Bloomberg News today. Felda declined to comment in a statement.

“Investors are still optimistic about commodities globally,” said Scott Lim, who manages 380 million ringgit as chief executive officer of Kuala Lumpur-based MIDF Amanah Asset Management Bhd. “The stock is in high demand. It’s skewed by the fact that the amount that is going to be openly bid is actually quite small relative to the institutional size.”

Facebook Factor

The offering comes amid weakened global investor appetite for shares with concern that Greece will abandon Europe’s common currency erasing about $3.9 trillion from global equities this month, according to data compiled by Bloomberg. Facebook has fallen 26 percent from its IPO price after raising $16 billion this month.

“It’s probably unlikely to be a Facebook IPO,” Alan Richardson, who helps oversee about $87 billion as a money manager at Samsung Asset Management in Singapore, said by phone. “I think it’ll be successful. Foreigners are finding it difficult to get allocation.”

China Yongda Automobiles Services Holdings Ltd. this week scrapped a share sale in Hong Kong, while Sany Heavy Industry Co. has trimmed its planned offering, people with knowledge of the matter said May 30.

Malaysian stocks have withstood the global selloff, with the FTSE Bursa Malaysia KLCI Index (FBMKLCI) little changed so far this month compared with a 10 percent drop in the MSCI Asia Pacific Index.

Larger IPOs

Kuala Lumpur-based Felda Global manages estates for the Federal Land Development Authority, a Malaysian government agency. It has about 355,864 hectares (878,984 acres) of plantations in Malaysia in addition to land in Indonesia. The company also has palm oil refining businesses in China, Indonesia, Turkey and South Africa, according to a draft prospectus issued April 26.

The offering follows calls by Malaysian Prime Minister Najib Razak for larger companies to list to attract global investors. At 10.2 billion ringgit, this would be the Southeast Asian nation’s biggest share sale since Petronas Chemicals Group Bhd. (PCHEM) raised a record 12.8 billion ringgit in 2010, according to data compiled by Bloomberg.

The IPO comprises 2.19 billion shares, according to the listing document. Najib is scheduled to officially unveil its prospectus today.

Louis Dreyfus Holding BV, a Dutch commodities group, agreed to pay about $150 million for a 2.5 percent stake in Felda Global ahead of the share sale, two people with knowledge of the matter said on May 15.

Cornerstone Investors

Some 723.5 million shares will be distributed to cornerstone investors who must hold them for at least 180 days, according to the term-sheet.

Fidelity Investments and Value Partners Group Ltd. are among foreign investors to be allotted shares. Lembaga Tabung Haji, Employees Provident Fund and Permodalan Nasional Bhd. will be among local investors along with Hong Leong Foundation and the Guoco Group, the statement said.

Felda Global plans to use 2.2 billion ringgit of the proceeds to buy plantation assets, according to a sale document published in the Star newspaper today. The company intends to invest another 840 million ringgit on oil and fats, manufacturing and logistics businesses, and 780 million ringgit on building and acquiring mills and refineries, it said.

The company boosted profit 1 percent to 942.2 million ringgit last year, according to its preliminary prospectus. Sales advanced 29 percent to 7.5 billion ringgit. Felda Global plans to pay half of its profit as dividend, the document shows.

CIMB Investment Bank Bhd., Maybank Investment Bank Bhd. and Morgan Stanley are managing the offering, according to the draft prospectus. JPMorgan Chase & Co. and Deutsche Bank AG are also involved.

To contact the reporters on this story: Chong Pooi Koon in Kuala Lumpur at pchong17@bloomberg.net; Chan Tien Hin in Kuala Lumpur at thchan@bloomberg.net

To contact the editors responsible for this story: Barry Porter in Kuala Lumpur at bporter10@bloomberg.net; Philip Lagerkranser in Hong Kong at lagerkranser@bloomberg.net

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