April 27, 2012 / 10:00 AM / in 6 years

UPDATE 1-Malaysia Felda Global a step closer to $2 bln IPO

* Felda IPO set to be Asia’s biggest this year

* About 88 pct of shares reserved for institutions

* Felda IPO could generate $50 mln in fees for banks

KUALA LUMPUR, April 27 (Reuters) - Malaysia’s Felda Global Ventures Holdings moved a step closer to its planned $2 billion IPO, set to be Asia’s biggest listing this year, after it released a prospectus that showed the company’s profit rose 9 percent to $332 million last year.

The listing, expected to be launched in May or June, will provide Malaysia’s $27 billion palm oil sector with more financial firepower and monetise assets for the government.

About 55 percent of the 2.2 billion shares on offer are held by the Malaysian government-owned Federal Land Development Authority (FELDA), while the rest are new shares being issued by Felda Global Ventures Holdings (FGVH), according to the draft prospectus filed late on Thursday.

Almost 88 percent of the total shares on offer are reserved for institutional investors and the rest for retail, the filing added.

The deal could be Malaysia’s third-biggest IPO ever and a big fee event for underwriters. Asian IPOs offer a commission of between 2.0-2.5 percent, which means the five banks mandated for the offer may share about $50 million between them.

The company has hired CIMB Investment Bank, Maybank Investment Bank and Morgan Stanley to be joint global coordinators, while JPMorgan and Deutsche Bank are joint bookrunners.

Asia-Pacific IPOs and equity capital market deals are off to the slowest start in four years in 2012, with activity down about 20 percent so far this year compared to the same period last year, according to Thomson Reuters data.

The FGVH deal could changed that. The Singapore stock exchange is waiting for several high-profile deals, including those planned by Formula One and Manchester United football club. In addition to FGVH’s listing, Malaysia state investor Khazanah Nasional is expected to dual list Integrated Healthcare Holdings in a deal worth $1.5 billion.

FELDA is a statutory body set up in the 1950s to help Malays, the largest ethnic group in Malaysia, fight rural poverty. After the listing, the government agency’s share of the company will drop to 40 percent.

The company ended 2011 with gross profit margin of 27 percent, down from 31.7 percent the previous year.

FGVH plans to use proceeds from the new share issuance to fund factory takeovers, buy plantations and logistics businesses, construct mills and refineries and pay down debt.

FGVH is the third-largest oil palm plantation operator in the world based on planted area, the company said, while its 49-percent-owned unit, Felda Holdings Bhd, is the world’s largest producer of crude palm oil.

Plans to list the company sparked resistance from some of the 113,000 farmers who own part of FGVH and fear a loss of control in an asset in which they’ve invested for generations. A legal challenge they filed has been dismissed and the listing was recently approved by the farmers’ cooperative.

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