The Felda Global IPO is next week on 28th June 2012, but at the last minute a pall is cast on the listing by troubling news reports that its strategic partner Louis Dreyfus, a global commodity power house, is pulling out as a strategic investor. The commodity giant was initially offered a 5% stake, but later it was expected to take 2.5%.
Khor Reports comments:
We heard rumours of a possible Louis Dreyfus pullout at the end of last week, and the news was broken by The Edge Malaysia on Monday. The strategic partnership may still proceed, but the investment stake seems to be in doubt.
It is unfortunate that Felda Global had earlier touted Cargill and Bunge as possible investors and failed to secure either. Worse now, and well past the company’s cut-off date of 13 June for book building, it seems that Louis Dreyfus and Felda Global are still in negotiation and neither has yet to come out to categorically and convincingly deny the news reports of a pullout.
The industry chatter was that Dreyfus might want to aggressively expand its palm oil physical trade presence, and would be keen to invest, while the others were ambivalent. This eleventh hour uncertainty over a strategic investor, a commodity powerhouse, could add a serious pall to the upcoming IPO.
Felda Global has tried to calm the market by reiterating that it has many other strategic investors and that the over subscription for its shares is vast. However, many market players and commentators openly express doubts on the high figures reported. Furthermore, none of the other strategic investors have the clout and credibility of catching one such as Louis Dreyfus.
The commodity giants are already invested in the palm oil trade. These include ADM which has a 15% strategic stake in Wilmar. Bunge and Cargill have palm businesses via Tiga Pilar Plantations and the Cargill-Temasek joint venture, respectively.Louis Dreyfus has a 50% stake in a bulking installation in Kalimantan with Kencana Agri. It also has an upstream presence via a green-field site on which planting operations started in late 2008, and whose grassland areas will only be planted.
Updated 21 June, 9.25pm for commodity giants palm interests.