Malaysia's Felda to use 350,000ha land in IPO

Malaysia's Federal Land Development Authority (FELDA) will inject 350,000 hectares of plantation land into its commercial arm's listing which will take place by mid-2012, its chief said on Friday, in what is likely to be the country's biggest IPO next year.
Felda Global Group's listing, which is expected to raise between 5 billion-6 billion ringgit ($1.6 billion-$1.9 billion), is drawing drawn wide interest at a time when appetite for initial public offerings has been hit by market volatility.
Analysts have also said the IPO could be a political landmine for the government amid criticism that it would sideline FELDA settlers, a key vote bank for Prime Minister Najib Razak. Felda Global Group managing director Sabri Ahmad declined to estimate how much the IPO would raise but said it would exclude the half million hectares of land belonging to the settlers' co-operative.
"Tanah peneroka (settlers' lands) are not touched at all," Sabri told Reuters in an interview. "The settlers' land will continue to be their land, but we will continue to buy and process their crop." In addition, the co-operative would be one of the key shareholders of the listed entity, he added. Felda Global's listing is part of the authority's plan to monetise its assets, after it earlier floated its sugar arm MSM Malaysia Holdings Bhd.
Prime Minister Najib Razak announced FELDA Global's listing in his recent budget speech earlier this month, saying it would create another blue chip plantation firm and attract investors to the local bourse. Local blogs have said the Felda Global listing would raise about 5 billion-6 billion ringgit, overtaking oilfield services provider Bumi Armada's $858 million IPO earlier.
Sabri, a palm oil industry veteran, said Felda Global Group aimed to become a global agribusiness firms similar to the likes of US based Archer-Daniels-Midland Co , Bunge Ltd and Cargill Inc. Sabri said the proceeds from the IPO would be used to expand Felda Global's core business in Southeast Asia, which include cultivating and processing oil palm, rubber and sugar cane. "We will later look at Africa and Brazil but we will focus on Southeast Asia first," he said.