Felda Seeking Land Acquisitions With $814 Million Left From IPO

Felda Global Ventures Bhd. (FGV), the world’s third-largest manager of oil palm plantations, may buy land in Southeast Asia and expand into Africa with 2.6 billion ringgit ($814 million) remaining from its share sale.

The Malaysian planter, which completed the world’s third-largest initial public offering in 2012 at $3.3 billion, is seeking land in Indonesia, Cambodia and Myanmar, Chief Executive Officer Mohd Emir Mavani Abdullah told reporters in Kuala Lumpur today. The company also exploring palm oil operations in Africa, he said.

Malaysia has reached the limit of area it can use for oil palm cultivation, spurring planters to either seek local takeovers or land abroad to grow their portfolios. Felda used IPO proceeds to complete the 1.2 billion ringgit takeover of Pontian United Plantations Bhd. this week, while local competitor IOI Corp. yesterday made a bid for Unico-Desa Plantations Bhd. (UDP)

“Felda is keen to expand into the Asean region, including land acquisitions in Myanmar and Cambodia,” Mohd Emir said, referring to Southeast Asia. It is also looking for “green field lands in Indonesia as the currency is down and it’s a good time to buy.”

The rupiah has fallen 13 percent this year against the dollar, the most among 11 most-traded Asia Pacific currencies tracked by Bloomberg.

The Pontian acquisition boosted Felda’s land-bank by four percent, adding 40,000 acres, Mohd Isa Abdul Samad, Felda’s non-executive chairman, told reporters in Kuala Lumpur today.

Demand Crimped

While Malaysia’s output of palm oil can grow through higher productivity, it may not increase much above today’s levels, the government said in March. A tripling in palm oil prices from 2006 to March 2008 drove planters including Sime Darby Bhd., the world’s top palm oil producers to turn to new countries with suitable climates such as Liberia.

Slower growth in China and recessions in Europe have since crimped demand for the world’s most-used cooking oil, hurting prices and pushing inventory to record highs in Malaysia and Indonesia earlier this year.

Crude palm oil futures for delivery in December fell 1 percent to 2,289 ringgit per metric ton on the Bursa Malaysia Derivatives exchange as of 12:30 p.m. in Kuala Lumpur today.

“We expect palm oil prices to do better in the first quarter of next year, between 2,400 to 2,500 ringgit,” Emir said. “If soya bean prices goes up next year, chances of CPO prices going up is also high.”

Felda plans to replant at least 15,000 hectares annually for which it has allocated 210 million ringgit for the next three years, Emir said. “Increasing productivity and efficiency of our assets, especially in terms of improving our oil extraction rate and yield, is an important facet of our growth strategy,” he said.

To contact the reporter on this story: Manirajan Ramasamy in Kuala Lumpur at rmanirajan@bloomberg.net

To contact the editor responsible for this story: Jason Rogers in Singapore at jrogers73@bloomberg.net

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