Boustead Plantations Plans $326 Million IPO; Seeks Acquisitions

Boustead Holdings Bhd. plans to raise about 1.05 billion ringgit ($326 million) by listing its plantations unit in one of Malaysia’s biggest initial share sales this year, even as palm oil trades near a seven-month low.

Boustead Plantations Bhd. may spend about 400 million ringgit from the sale to acquire plantation estates and reserve land mainly in Malaysia, Chairman Lodin Wok Kamaruddin told reporters in Petaling Jaya, near Kuala Lumpur today. The company is seeking to expand its land bank to 100,000 hectares (247,105 acres) over the next three years from 71,000 hectares of planted area now, he said.

“We have to look at our involvement in plantation activities more in the medium to long term,” Lodin said. “In the next six months, we’ll probably see the price” of crude palm oil rising, he said.

Palm oil futures lost 5.8 percent this year as a stronger ringgit made the commodity more expensive and amid competition from other oilseeds such as soybeans and canola. Demand for palm oil from countries including India and Pakistan may increase ahead of the Muslim fasting month of Ramadan and the Eid celebrations that follows, Lodin said.

Prices may climb to 2,700 ringgit to 2,800 ringgit a ton in the third or fourth quarter this year, Lodin said.

The contract for delivery in August fell for a third day to close at 2,505 ringgit a metric ton on the benchmark Bursa Malaysia Derivatives in Kuala Lumpur. Futures fell to as low as 2,483 ringgit yesterday, the least for a most-active contract since October.

Acquisition Plans

Boustead Plantations has “several proposals” for land acquisitions, Lodin said.

“The priority is to focus on Malaysia, but if some good opportunities come around for land or brownfield in neighboring countries such as Indonesia or Papua New Guinea, we will certainly consider” them, he said.

The company said it will use about 100 million ringgit of the sale proceeds for replanting, and 500 million to repay bank borrowings. The expected proceeds are based on an IPO price of 1.60 ringgit a share, according to a statement from the company.

About 656 million shares will be offered to investors, according to the prospectus. Affin Holdings Bhd., Malayan Banking Bhd. and Credit Suisse Group AG are managing the sale. The listing is targeted for June 26.

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