Malaysian palm oil giant Felda Global is expected to buck gloomy global trends with its $3.12 billion stock market debut Thursday, in the world’s second-largest IPO this year after Facebook.
The volatile economic environment has forced the delay of other major offerings across Asia including a planned $2.5 billion Formula One listing in Singapore.
But Felda Global Ventures Holdings has already attracted a high-powered list of cornerstone investors, including the global investment arm of the Qatar Investment Authority, and analysts expect the momentum to continue.
“I think it will make a strong debut,” Kaladher Govindan, head of research at stockbroking firm TA Securities, told AFP.
Ooi Chin Hock, a brokerage dealer with Malaysia’s M & A Securities, said he expected an opening price of at least 5.20-5.50 ringgit ($1.63-$1.72), or a premium of up to 19 percent from the IPO retail price of 4.45 ringgit.
“It could strike an upside of up to 25 percent,” Ooi told AFP.
Felda Global estimated it had raised 9.93 billion ringgit ($3.12 billion) from the IPO, which was heavily oversubscribed.
Despite the dark shadow that the eurozone debt crisis continues to cast over global financial markets, and the jitters sparked by Facebook’s disastrous listing last month, analysts said Felda shares remained well supported.
Facebook raised $16 billion from its IPO but its shares have plummeted since its debut.
Ooi said there could be some profit-taking for Felda Global, but the downside was “quite limited” due to strong demand from foreign investors who want to keep the commodity stock in their portfolio.
Felda Global, the world’s third-largest palm oil plantation operator, is an arm of the Federal Land Development Authority, a government agency that provides land to the rural poor.
Prime Minister Najib Razak announced the listing plan in October as part of a wider push to divest state-run firms and increase foreign investment in the Southeast Asian country.
Najib, who must call general election by next April, also hopes to curry favor with the more than 112,000 settler families who own part of the plantation land and stand to gain 15,000 ringgit each.
Some settlers have opposed the listing due to concerns that the scheme may expose them to more risk and potentially rob them of their land.
But analysts say the scheme will help Malaysia’s $27 billion palm oil sector — the world’s second largest — compete more efficiently with top producer Indonesia.
Felda Global currently sells palm fruit or crude palm oil and processed palm oil to third parties.
Funds raised from the listing will be used to replant mature oil palms and further expand into downstream businesses to create a more self-contained global player.
Palm oil is a key ingredient in soap and a range of food products whose consumption is predicted to soar in coming decades.
Felda Global also produces rubber, cocoa, and other agricultural products.
“We are very excited as this listing represents a historical milestone for the Felda Group and signals the start of our transformation program to take us into the next 50 years,” said Felda Global President Sabri Ahmad.
“At the same time, it also means that the Felda Group is poised to play a bigger role in nation-building,” he said Monday.
“Where before the government had helped Felda settlers to enhance their economic well-being, now it is Felda’s turn, through business expansion, to give back to the country and help uplift the lives of other Malaysians, which also include the second and third generations of Felda settlers.”