THE government will sell at least RM1.5bil of shares in Felda Holdings Bhd, creating the world's biggest publicly traded oil palm planter, bankers involved in the transaction said.
It would offer at least 20% of the company to investors, completing the sale early next year, said the bankers, who asked not to be identified. The sale will help the government trim its 2004 budget deficit to RM13.4bil, the smallest in five years.
Felda may be valued at between RM11.7bil and RM33.7bil after it had been reorganised into a public company and traded on the stock exchange, Second Finance Minister Datuk Jamaludin Jarjis said last month.
A Felda listing will put one of the biggest companies on the stock exchange and ease some burden on the federal budget deficit, said Christopher Leow, who helps manage the equivalent of US$15.3mil at PacificMas Asset Management Sdn in Kuala Lumpur. He plans to buy the stock.
Malaysia is the world's largest exporter of palm oil, which is used in the manufacture of soap, chocolates, cosmetics and food.
Avenue Assets Bhd, a stockbroking company that controls the country's postal service, is advising the government on the Felda share sale and the domestic offering. J.P. Morgan Chase & Co will help manage the sale of shares to overseas investors.
Avenue managing director Wee Hoe Soon and Felda managing director Fadzil Yunus declined to comment. So did J.P. Morgan.
Malaysia has raised RM3.4bil selling stakes in toll-road operator PLUS Expressways Bhd, postal services operator Pos Malaysia Services Holdings Bhd, and rice monopoly Padiberas Nasional Bhd since the 1997/98 Asian crisis to attract overseas investment and fund the budget shortfall.
The KLSE Composite Index has risen 21% so far this year, though it still lags gains in the benchmark indices in Indonesia and Thailand.
Still, Felda may benefit from a rise in palm oil prices to a nine-month high on the Malaysian Derivatives Exchange that has pushed an index of plantation stocks to its highest level since March 27, 1998. Crude palm oil prices have averaged RM1,441 a tonne this year, compared with RM1,363 in 2002.
Felda will buy about 354,554ha of plantation land from the state land development agency. It would also buy the stakes held by its partners in 40 subsidiaries that are involved in palm oil milling and refining, Jamaludin said on Sept 13.
About 80% of Feldas land is used for growing oil palm, accounting for about a fifth of such plantations in Malaysia, according to the companys 2000 annual report. About 8% of its land is used for producing rubber, equivalent to 10% of the country's total rubber plantation area.
The reorganisation of Felda would create a group with RM700mil to RM750mil of profit, the bankers said, compared with about RM600mil in 2002.
An application to the Securities Commission for the share sale would be made next month. Bloomberg
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