commodity trader

Felda Global saved major embarrassment over Dreyfus?

Khor Reports notes & comment: 

Last minute negotiations seem to save Felda Global from serious embarrassment, as it doesn't lose one of its (if not "the" most) prominent strategic investors - Louis Dreyfus Commodities. 

However, from an initial offer of 5% to a final take-up of a 0.5% stake (a 90% reduction), as widely reported in newspapers, this seems cold comfort. Thus, 10% of what was initially offered was finally done, and apparently well past the expected cut-off date. Felda Global says that the stake was reduced because of high IPO demand. 

Industry commentators contrast this 0.5% stake with fellow global commodity giant, Archer Daniels Midland's (ADM) 16.4% interest in Wilmar@. Despite the low figure, the 0.5% stake is still touted as a "strategic investment."

On 21 June, the FT notes: "The involvement of Dreyfus as a strategic investor was widely seen as a key element of the biggest IPO since Facebook’s stock market listing last month...“It’s [the Dreyfus involvement] something that’s been pretty prominently talked about as a big ticket item and it’s an embarrassment. This was something that was meant to be a key part of the IPO,” a third person said. “There is a lot of tension and heated tempers right now.”...."  

A strategic partnership is apparently also now in place, although details were not disclosed. It is likely that Louis Dreyfus Commodities sought to market Felda Global's palm oil; but we hear from industry sources that Felda Global may not have been entirely keen to outsource its marketing to third parties.

It would have been interesting to be the proverbial "fly on the wall" when Felda Global and Louis Dreyfus thrashed out the latest strategic investment and strategic partnership. Did Felda Global have to offer better terms to Louis Dreyfus to lure them back, after news reports that its expected stake was given out to others? Was an even better, lower effective price, given to the commodity company?
News articles:

@"The Company has a 16.4% ownership interest in Wilmar International Limited (Wilmar), a Singapore publicly listed company. Wilmar, a leading agribusiness group in Asia, is engaged in the businesses of oil palm cultivation, oilseeds crushing, edible oils refining, sugar, consumer pack edible oils processing and merchandising, specialty fats, oleo chemicals, biodiesel, fertilizers and soy protein manufacturing, rice and flour milling, and grains merchandising...."


Felda Global strategic investor woes? (updated)

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%.

News articles: 

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.

Today's news report says that Louis Dreyfus is not a strategic investor at this point, and its stake has been "snapped up" by others.