English World

FGV to take over NBPOL?

palm oil
SPECULATION is rife that Felda Global Ventures Holdings Bhd (FGV) has set its sights to acquire a major stake in London Stock Exchange-listed New Britain Palm Oil Ltd (NBPOL), which has a market capitalisation of about £615.2mil (RM3.34bil).

NBPOL which is based in Papua New Guinea (PNG), has 77,000ha of oil palm plantations in PNG and the Solomon Islands, 12 palm oil mills and one refinery each in PNG and Liverpool. The group is also the largest domestic sugar and beef producer in PNG via its over 7,700ha sugar cane plantations and 9,200ha of grazing pastures as well as a seed production and palm breeding facility.

It is going to be interesting how cash-rich FGV is going to succeed in wrangling a major stake in NBPOL given the growing sentiment on “resource nationalism” in PNG and other emerging economies of late, says an industry source.

This is reflective of the failed attempt by another Malaysian plantation group, Kulim (M) Bhd to raise its existing stake in NBPOL by 20% to 68.97%.

Kulim, the plantation investment arm of Johor Corp, had proposed to partially acquire up to 30 million shares in NBPOL at £5.50 (RM27.24) per offer share with a total cash consideration of about £165.05mil (RM812.3mil) in June last year.

Right from the beginning, Kulim’s bid has met with strong resistance. From the rejection by London and Papua New Guinea-listed NBPOL’s independent advisers, right down to the restraining order imposed by the Securities Commission of Papua New Guinea (SCPNG) and the National Court of Papua New Guinea which then dismissed Kulim’s application to lift the SCPNG’s order.

According to SCPNG, NBPOL is the pride of PNG and the West New Britain Province, and a renowned flagship that floats their names on the international financial and commodity markets.

“By far, it is the gold mine on the island that provides income for (a) vast number of families in the county. It is an integral and significant asset of this country.

“The commission sees that Papua New Guinea and its shareholders will be marginalised by a foreign company on their own land,” the regulator said.

Given such a scenario, will FGV be facing the same fate as Kulim? Perhaps not.

FGV, apart from being the world’s third largest oil palm plantation player, also has the advantage of being the manager for Felda smallholders’ land for decades, says a plantation analyst.

He points out that Felda’s scheme model is one of the most successful land development schemes in the world, admired by many developing and emerging nations because it helps to alleviate poverty in the rural economy.

“This can be one of the major selling points for FGV to the NBPOL shareholders as currently about 25% of NBPOL’s oil palm fresh fruit bunches (FFB) is supplied by over 15,000 smallholders over there,” says the analyst. Some 30% of the oil palm growers in PNG comprises smallholders.

Hence, NBPOL may consider replicating the successful Felda scheme model with the opening up of oil palm plantations to help its smallholders and farmers improve their income levels.

NBPOL will also gain a wider global market access for its RSPO-certified palm products to over 10 countries which FGV operates in currently, adds the analyst.

For FGV, acquiring a stake in NBPOL will enable the plantation conglomerate to spread its risks to other countries apart from Malaysia and Indonesia as well as secure consistent raw sugar from NBPOL’s unit Ramu Sugar plantations, the leading sugar producer in PNG to supply to its sugar subsidiary, MSM Holdings Bhd in Malaysia.

– The Star

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