KUALA LUMPUR: Felda Global Ventures Holdings Bhd is now back in mergers and acquisition (M&A) mode, inning accordance with chairman Datuk Azhar Abdul Hamid in an interview with The Edge Malaysia, as it seeks to remedy its aging oil palm age profile in order to raise its fresh fruit bunch (FFB) yield per hectare.
“If you take a look at 2017, we just did only 15-plus tonnes of FFB [per hectare] but that’s because a great deal of our age profile was generally off,” Azhar, who has actually been with FGV 6 months now, informed The Edge executive editor Jenny Ng and writer Emir Zainul in the weekly’s cover story, ‘Massive job ahead for FGV’, that was published for the week of April 2 to April 8.
The group is remedying that now, he said, and strongly replanting to make sure the age profile concern gets remedied. “So, there are 2 ways to fix it– one is to do aggressive replanting and the other is, if opportunities come our method we can acquire brownfields that contribute to or boost or enhance our age profile,” Azhar, who was previously with the Mass Fast Transit Corp as CEO, stated.
Though Azhar gave a fast “yes” when asked if the group is now in M&A mode, he likewise confessed that the group’s money stack is not nearly sufficient to outright fund any acquisitions. “But [what] we are going to do is we’re wanting to do some refinancing and we’re wanting to release sukuk. We’re likewise looking to get rid of some of the properties that are not core to us, so that will also generate cash,” he said.FGV’s money stack stood at RM1.74 billion as at end-2017, down from RM5.09 billion nearly 6 years earlier when it was noted on Bursa Malaysia. Age profile is a problem FGV has actually been grappling with for some time, the weekly wrote. In 2012, when it was listed, about 50% of its palm trees were aged 21 years or older. The percentage is expected to be up to 33% this year.
On the other hand, its sugar business under MSM Malaysia Holdings Bhd is also examining some proposals, Azhar verified, consisting of one from Tan Sri Peter Sondakh. “However as I stated, we will still examine. You have to understand that we have an obligation to all our stakeholders. Whatever we do, we must always bear them in mind and we are not going to do anything that is going to ruin value for our stakeholders,” he said.Before Azhar
‘s entry, among the issues raised was about FGV’s aggressive and, sometimes, pricey growth, mostly funded by the profits of RM4.5 billion from its going public in mid-2012, the weekly wrote. The expansion consisted of the RM1.2 billion acquisition of Sabah-based United Plantations Bhd, the ₤ 120 million or RM628 million acquisition of Asian Plantations Ltd, 8,478 ha of oil palm land in Sabah from Golden Land Bhd for RM655 million cash and the RM2.2 billion purchase of the staying 51% stake in its associate company Felda Holdings Bhd.Also present in the weekly’s interview was FGV group president and CEO Datuk Zakaria Arshad. When Zakaria was designated in April 2016, he practically immediately put all the proposed acquisitions on hold, canceling the speak with acquire a 55%stake in China-based edible oils producer Zhong Ling Nutril-Oil Holdings Ltd for RM976.25 million money, and a 37 %stake in Indonesian plantation company PT Eagle High for US$ 680 million(RM2.8 billion)from Sondakh.Zakaria informed the weekly that when he handled the task, the very first thing he stated was there would be no M&A s,”since to me, there was a lot of things to do with our existing properties.”Now, he said the group want&to sweat its possessions and improve its yield.Mulls leaving investments, JVs that ‘do not give any worth’FGV is also considering dealing with financial investments that it don’t see
a future of holding on to. To Azhar, the group has actually not made great investments
in the past and requires to evaluate a great deal of those financial investments now. The very same is true for some joint ventures( JVs ).”We have some joint endeavors as well that we might leave … since they do not really offer us any worth,” Azhar informed the weekly.To found out more
about what the duo is preparing, pressing issues dealt with, whether they will be given a complimentary hand in running the business that has been perceived to be a”political animal”, and if Zakaria will leave
after the upcoming general election, get a copy of The Edge at newsstands near you today.