Genting Plantations invests RM407mil for Indonesian expansion

The palm oil industry is still very labour intensive, where harvesting is still a job which requires skilled labour — AZMAN GHANI/The Star

KUALA LUMPUR: Genting Plantations Bhd (GenP) is accelerating its upstream expansion in Indonesia by buying an 85% stake in an oil palm plantation operation in South Kalimantan for US$94.97mil (RM407.39mil) in cash.

In a filing with Bursa Malaysia, the Genting Bhd subsidiary said its unit AsianIndo Holdings Pte Ltd had inked a conditional agreement with Singapore-based Lee Rubber Co (Pte) Ltd to buy 100% equity interest in Knowledge One Investment Pte Ltd (KOI), which in turn owns 85% in PT Kharisma Inti Usaha (PT KIU).

PT KIU has the rights to cultivate (hak guna usaha) about 14,661ha in Kabupaten Tapin into an oil palm plantation.

GenP said the proposed acquisition, which is expected to be completed in the fourth quarter of this year, represented a strategic investment by the group for its expansion initiative in Indonesia.

It noted that PT KIU’s land was situated close to the group’s other landbanks in Central Kalimantan, thereby providing potential benefits from operational synergies and economies of scale.

The deal will increase the GenP group’s combined plantation landbank in Malaysia and Indonesia from its present 227,936ha to 242,597ha.

“It also accelerates GenP Group’s upstream expansion in Indonesia as some 12,893ha (under Cahaya Agro Abadi Pte Ltd’s Inti estate) have already been planted, thus increasing GenP Group’s total planted area in Indonesia to 84,833ha (from 71,940ha as at Dec 31, 2016) or an increase of 17.9%. 

“The addition of PT KIU’s 60 metric tonnes per hour palm oil mill will bring GenP Group’s ownership of oil mills in Indonesia to four units with a total milling capacity of 255 metric tonnes per hour,” said GenP.