Felda Global IPO a market blockbuster?

How much Felda Global Venture will be valued? Will the valuation be lofty, low or reasonable?


THE cost of wreckage in Midtown Manhattan caused by the Chitauri and the Avengers, we were told, is greater than the financial carnage of 9/11, Hurricane Katrina and the Japanese tsunami.

The physical damage of the shape-shifting aliens invasion would be US$60 billion to US$70 billion, with economic and clean-up costs hitting US$90 billion. Add on the loss of thousands of lives, and the overall price tag would stand at a whopping US$160 billion, nearly half of Malaysia's gross domestic product.

Luckily, all the damage happened on screen.

Actually, The Hollywood Reporter (THR) hired Kinetic Analysis Corp, one of the US leading disaster-cost prediction and assessment firms, to get a sense of just how much damage the Chitauri would have caused had the film been real life.

For context, THR quoted that the September 11 terrorist attacks cost US$83 billion, Hurricane Katrina cost US$90 billion, and the tsunami in Japan last year washed away US$122 billion.

Speaking of reality, the Avengers is wreaking havoc at the box-office to be the next US$1 billion blockbuster.

In its first two weeks, the Marvel/Disney movie pocketed more than US$700 million worldwide and should join the billion dollar club pretty soon.

Back in Malaysia, we have our own potential blockbuster, although it is not in 3D or IMAX formats. It is called Felda Global Venture Holdings Bhd's (FGVH) initial public offfer (IPO).

Sceptics said FGVH's IPO would not excite investors, given the choppy global economy and the planter's "lack" of growth story.

Adding to the sceptism is the (mis)perception that May is a "sell and go away" month as investors are cautious in anticipation of the general election in June.

So will the IPO generate robust demand? Will its shares go to the moon upon listing and make many an investor happy?

Early numbers have implied that it will.

Nearly 420 million FGVH shares for approved investors under International Trade and Industry Ministry (Miti) attracted demand 17 times more. That's commendable. Bear in mind that investors are still in the dark over the prices for both institutional and retail investors.

A friend's remisier believes FGVH share price could double its IPO price in a short time after listing.

Top FGVH executives and its bankers, are now on a global roadshow to pre-market the IPO, which offers a total of 2.19 billion shares to institutional and retail investors.

The pre-marketing process in an IPO is where bankers test investor appetite for the deal and come up with a price band.

FGVH also has already started talks with potential cornerstone investors. These are investors who buy into an IPO and agree not to sell for a certain period of time after listing.

FGVH's is the world's second largest this year. The biggest is Facebook Inc's, which is seeking some US$96 billion and expected to be listed on May 18.

Interestingly, there were contrasting stories regarding the Facebook IPO demand from two top news agencies this week.

One report said the demand for the IPO is strong, while another said it is weak. Both were published less than an hour of each other.

So the next question is how much FGVH will be valued? And whether the valuation is lofty, low or reasonable?

Talk is that the institutional price has been set at RM4.65 for each share, with the retail price to be slightly lower than that.

Are we hearing price details by end of the month?

Are we hearing price details by end of the month?