FGV, TH mull up to US$1bil asset sale


Kuala Lumpur: Palm oil giant FGV Holdings Bhd and the pilgrims fund are considering selling plantation assets in Indonesia as the government-linked entities seek to improve their financial position, according to sources.

FGV and Lembaga Tabung Haji (TH) are working with an adviser to gauge potential buyer interest in Trurich Resources Sdn Bhd, which controls 42,000ha of oil palm estates in Kalimantan, according to the sources. They may seek to value Trurich at as much as US$1bil including debt.

Prime Minister Tun Dr Mahathir Mohamad has been seeking to clean up the balance sheets of state-backed companies after a global scandal erupted over the previous government’s stewardship of the 1MDB investment fund.

Since coming to power in a surprise election win last year, he has pledged to improve transparency at government-linked firms and apply more scrutiny to their business dealings as part of an anti-corruption drive.

The deal would help Trurich’s owners offload assets that have been the subject of contention. Trurich said in December it filed a police report alleging that former senior management of the pilgrims fund misled the company into overpaying for Indonesia land purchases between 2008 and 2009. The executives haven’t publicly responded to the allegations.

FGV and TH haven’t made a final decision on whether to sell, and they may decide to keep the assets if they can’t fetch an attractive price, the sources said.

Representatives for FGV and TH declined to comment, while Trurich didn’t answer calls to its office seeking comment.

The Malaysian finance ministry agreed in December to take over as much as RM19.9bil of underperforming assets from TH, which helps Muslims save for a pilgrimage to Mecca. The rescue will help revive the fund’s balance sheet by offloading equity investments with significant unrealised losses.

FGV swung to a net loss of RM208.8mil in the fourth quarter of last year, from a net income of RM50.4mil a year earlier. — Bloomberg