FGV buys Kalimantan land for RM44m

FGV buys Kalimantan land for RM44m
Business & Markets 2013
Written by Madiha Fuad of theedgemalaysia.com
Wednesday, 10 July 2013 09:47

KUALA LUMPUR: In its first upstream acquisition post-IPO, Felda Global Ventures Holdings Bhd (FGV) has acquired 21,037ha in Kalimantan Barat, Indonesia, for RM44 million.

?“The acquisition is consistent with FGV's long-term business plan to expand the company's landbank in Southeast Asian countries," FGV chairman Tan Sri Mohd Isa Abdul Samad said after the signing of the share purchase agreements between its subsidiary Felda Global Ventures Kalimantan Sdn Bhd (FGVK) and two Indonesia-based companies.

Under the two separate agreements, FGVK will acquire a 95% stake in PT Temila Agro Abadi for RM25.7 million and 95% of PT Landak Bhakti Palma for RM18.3 million.

Isa reasoned that Temila Agro's 8,193ha site has a higher valuation compared with Landak Bhakti's as the tract is partially planted with oil palm trees. Landak Bhakti's 12,844ha rubber land is currently vacant.

"The purpose of purchasing the land in this area is that it is closer to our other landbanks, which makes it easier for us to manage," Isa said, adding that the strategic investments are expected to enhance the future earnings and shareholder value of FGV.

FGV last year acquired 15,000ha through its 95% owned?PT Citra Niaga Perkasa. It also owns another 40,000ha in Kalimantan Barat through its joint venture with?Lembaga Tabung Haji.

Another notable acquisition was FGV's purchase of a biodiesel refinery for RM35 million in April this year.

Isa had in the past said the group was evaluating 12 acquisition proposals, including PLANTATION [] and downstream businesses.

FGV had planned to spend 60% or RM2.2 billion of its IPO to acquire?plantation assets, RM840 million to buy selected mills and refineries, and RM780?million to expand its oils and fats downstream segment.

More than RM40 million was set aside for capital expenditure to enhance the efficiency of FGV's operations, with the rest for loan repayments and other expenses.

FGV's gross proceeds from last June's?IPO totalled RM4.46 billion.

Even after the latest acquisition in Kalimantan Barat, FGV still sits on a fat cash pile, with RM3.85 billion as at end-March.

Isa said the group is also looking at acquiring landbanks in Myanmar, Cambodia and Papua New Guinea.

He said FGV is replanting 15,000 trees yearly.

The group manages 350,000ha of oil palm plantations in Malaysia?that produced 5.2 million tonnes of fresh fruit bunch last year.?It has operations in 10 countries in four continents.



This article first appeared in The Edge Financial Daily, on July 10, 2013.