Felda assures investors it has capital & appetite for $680m Eagle High Plantations deal

Visual from the FGV social media page

The largest producer of crude palm oil Felda Global Ventures Holdings Bhd (FGV) has assured its investors that it has means to buy stake in the Indonesian plantation assets after concerns of its poor financial performance had been raised.

The company had earlier announced that it would be buying 37 per cent stake in PT Eagle High Plantations for $680 million in cash and shares, from the Indonesian company’s majority shareholder Rajawali Group.

The shares of Felda hit a record low on Monday, after analysts said the Eagle High deal was too expensive, even as lawmakers termed the deal as risky.

Related Story: Over priced Deal? Malaysia’s FGV’s buys 37% in Rajawali Group’s EHP for $680m

FGV CEO Emir Mavani Abdullah said the group was still in discussion with the Rajawali group for the acquisition and that the board cannot reveal much at the moment.

“We are in the process of due diligence; once we have done the due diligence, we will inform the media the details. It is basically a collaboration with them, and it is all subjected to the due diligence and our shareholders’ approval in an EGM. Let me cross the bridge first, and then we can talk about it,” he told the press during a recess at its 7th annual general meeting on Tuesday.

When asked if FGV could afford the acquisitions, in light of its back-to-back announcements of acquisitions in EHP and Golden Land Bhd’s assets, Emir affirmed: “Yes, we can.”

He added that if the deal did not materialise, the deposits would be refunded with no penalty. The discussions and due diligence process is estimated to take a month.

Although the group said that it has proposed to acquire a 37 per cent stake in EHP in a stock filing on Friday, Emir said FGV is gunning for a controlling stake.

“My directors are still deliberating on this. If our shareholders’ insist on the majority stake then we will try to accommodate.”

Analysts have raised concern over FGV’s net gearing with the EHP acquisition but Emir said that the group will “structure it in a way that it won’t burden us, so we look at all internal processes and (will) make sure we have third party validation to give confidence to shareholders”.

Emir highlighted that the acquisition would be a strategic fit to FGV’s overseas expansion plans. “We are looking at the whole profile of the acquisition and the opportunities that the Rajawali Group has in Indonesia. We (are) already in Indonesia, in fact we’re planning to open up a fertiliser facility there,” he said.

FGV is also looking at its ability to exploit the opportunities that the Rajawali Group has in Indonesia in the consumer products distribution, especially through the sugar business.

“In sugar business, it will provide FGV with an opportunity to tap into sugar business which is a controlled investment in the republic where foreign investors are concerned,” he added.

On its divestment plans for assets in North America, Emir said the group hoped to conclude the deal within two months.

“We are divesting from all our non-performing and non-core assets,” he said.

Also read:

Indonesia’s Rajawali Group in divestment mode

Palm oil producer Felda looks to sell non-core assets in North America

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.