The Star Online: Business
The Star Online: Business |
- FGVH embarks on transformation
- Soft Space, MOL in card payment pact
- Maybank may be able to raise RM2.64bil via shares placement
| FGVH embarks on transformation Posted: 05 Oct 2012 06:24 PM PDT WITH its mission to attain a successful listing on Bursa Malaysia accomplished, cash-rich Felda Global Ventures Holdings Bhd (FGVH) is powering ahead to achieve the objectives set under its Strategic Blueprint (2012-2020) that mainly encompasses mergers and acquisitions (M&As) and geographical expansion to better secure the group's growth prospects. Group president and chief executive officer Datuk Sabri Ahmad says the plantation conglomerate's target mission is to become eight times larger in terms of size and capabilities within the next eight years. By 2020, FGVH expects to be able to stand out as one of the top 10 globally integrated and diversified agribusiness multinational companies with a presence in the entire business value chain, he tells StarBizWeek recently. The Blueprint, which was prepared by an independent foreign consultant prior to the group's listing exercise, has clearly outlined the strategic global positioning for FGVH to become a global leader in palm, top three global player in rubber and sugar, top three global player in industrial fats. The plans also calls for FGVH to become an anchor in the upstream business in South-East Asia (SEA) and Africa, SEA's top five in palm consumer goods, technology innovation and fully optimising the US oleochemicals business. A tall order to realise in just eight short years. "To achieve all of the above, we will have to bite the bullet by way of doing more M&As, cross-border expansions, seeking new revenue sources and boosting existing revenue via tackling efficiency issues such as aggressive replanting to address FGVH's high old-age palm tree profile," adds Sabri. Therefore, FGVH has reorganised its business entities into four main clusters, namely plantation upstream (oil palm, sugar and rubber), sugar business, downstream and its 49%-owned associate company, Felda Holdings Bhd (FHB). FGVH has 44 subsidiaries while FHB alone 44 subsidiaries. Of the total RM10.5bil (US$3.3bil) in IPO proceeds, RM6bil went to FGVH's principal shareholder, the Federal Land Development Authority (Felda) and the remaining RM4.5bil into FGVH's coffers. Cash for expansion From the RM4.5bil cash hoard, Sabri says that more than 50% will be channelled towards expanding FGVH's core upstream plantation in oil palm, rubber and sugar. This is key because last year, the upstream plantation division contributed about 70% to the group's total revenue. "The focus of our first phase expansion in the upstream plantation will be the Asean region namely Indonesia, Myanmar and Cambodia. "We are actively looking for land either greenfield or brownfield as well as joint ventures (JV) in oil palm, sugar and rubber in these countries," adds Sabri. He points out that Indonesia will remain an attractive destination for FGVH in terms of oil palm plantations. FGVH is presently planting oil palm on 15,000ha greenfield in Pontianak, West Kalimantan. He adds that the group is keen to acquire more raw land and brownfield plantations in Indonesia partly to address its old-age palm tree profile in Malaysia. FGVH is targeting to have 150,000ha of oil palm plantation in the republic within the next five years. At the same time, FGVH is scouring for more rubber plantation land bank in Myanmar and Cambodia. For economies of scale, Sabri says the group is looking for at least 30,000ha of greenfield rubber land in Myanmar, while in Cambodia, it would start with 10,000ha and expand it by 10,000ha annually, to reach 50,000ha. FGVH together with a joint-venture partner plans to modernise and expand a rubber processing plant in Myanmar with the possibility of going upstream. In addition, FGVH is looking at 30,000ha of sugar plantation via a JV in Myanmar. "In Malaysia, our listed subsidiary MSM Holdings Bhd is the country's largest sugar refiner producing one million tonnes annually," says Sabri. However, the group has to import 100% of crude sugar (the major raw material) to refine into sugar. "This is quite risky in terms of the value chain as we are too highly dependent on imports," explains Sabri. "Therefore, we need to secure our own raw sugar supply between 20% and 30% by acquiring sugar plantations abroad," he adds. Another JV by FGVH in Myanmar is to put up a RM20mil cooking oil packaging plant near Yangon, which is slated for commissioning by the middle of next year. "FGVH is planning to bring in our palm-based cooking oil from Malaysia and get them packed in Myanmar," adds Sabri. Currently, FHB's subsidiary Delima Oil Products Sdn Bhd has already been marketing its Saji brand cooking oil in Myanmar. which has received very good response. According to Sabri. once the group has completed the first phase of its upstream expansion in the Asean region, it will then focus on West Africa mainly for oil palm upstream operations. "In fact, I have already sent my team there to identify suitable areas with good agro climate for oil palm, such as in Cameroon and Nigeria. "FGVH aspires to implement and replicate the successful Felda scheme model in West Africa, Myanmar and Cambodia. "Our agenda is also to share our experience in creating land for the landless and eradicate poverty so that people who are poor have a steady income from cultivating oil palm and rubber." Apart from the upstream, FGVH is also looking at developing its downstream operations in Malaysia and overseas. "Part of FGVH IPO proceeds will go into downstream business such as putting more palm oil mills, refineries overseas as well as specialty fats and derivatives. "Even though the downstream ops is very challenging right now, FGVH needs to build up the downstream business to help protect and support its diversified upstream operations." For the past two years, Sabri admits that his focus has been to turn around the group's downstream business overseas. For example, Twin River Technologies US Inc. its oleochemcial business in Boston, US has returned to the black while its canola and soybean crushing plant in Canada, which is a JV with Bungee Canada, has also turned around. Dealing with old-age palm On the local front, Sabri says the group is implementing an aggressive replanting programme as well as looking to acquire small and mid-tiered plantation companies with younger aged palm profile in Malaysia and Indonesia to balance its existing old palm profile in the country. "We recognise this issue (old-age palm) as a factor of performance and even highlighted it in our prospectus as a long-term challenge for FGVH." The group is targeting to aggressively replant about 15,000ha per year. Up till June this year, FGVH has planted about 5,000ha at the Sahabat estates in Sabah with new planting material. "This aggressive replanting will take place in the next three to five years which we believe will help restore our plantations to the normal mature palm age profile," explains Sabri. Also, the replanting provides the opportunity for FGVH to replant with its award winning Yangambi material which is able to produce an oil extraction rate (OER) of 24% and boosts a yield of 30 tonnes per ha per year. Sabri admits it is unfortunate that 50% of FGVH's plantations are above 18 years of age but also has about 30% of its plantations consisting of young and immature trees which is quite high compared to those of established listed planters. However, the pertinent point is often overlooked by industry analysts or FGVH detractors. "Every year, a certain portion of this 30% or 70,000ha of FGVH-owned plantations will mature and so gradually balance the age profile." He points out that most established plantation companies in Malaysia have 5% young palm and 5% old-age palm profile. Sabri says FGVH will deal with how to increase its productivity within the next two to three years. Nationwide, FGVH used to have 169 estates, but today it has reduced it to 135 estates. "We hope to further integrate the current number to 100 estates for economies of scale, better logistics and deployment of labour to make them more efficient." Similarly, the group plans to integrate its 71 palm oil mills into 50 in the near future. According to Malaysia Palm Oil Board (MPOB), out of the top 10 oil mills in the country, four are owned by Felda Global Group. The top mill in Malaysia is Felda Jengka 21 mill with an OER of 24%. "We want to ensure everthing is in place the integration to get bigger mills and estates, improvement in technology and productivity while extensively reducing cost," adds Sabri. On research and development (R&D), Sabri says Felda Group is among the top especially in breeding oil palms in the country for the past 40 years. "I can certainly vouch on this fact because as the former MPOB chairman, I know the strength of all R&Ds conducted by the local plantation companies." Annually, Felda Group produces about 60 million oil palm seeds and also about one million ramets (clonal materials). Last year, the group's scientists patented the gene marker for Ganoderma, a basal rot disease affecting the oil palm trees. "Using the marker, we are going to produce planting material that is more resistant to the disease and hope to commercialise it in three years." Sabri stresses that FGVH is a good long-term investment and is still in its early days. "We will have more good news to share with our investors in the near future." Related Stories: |
| Soft Space, MOL in card payment pact Posted: 05 Oct 2012 06:19 PM PDT KUALA LUMPUR: Soft Space International Sdn Bhd has taken another step towards realising its cashless society dream by teaming up with MOL AccessPortal Sdn Bhd to form a mobile payment acquiring company. It will focus on enabling small and medium-sized businesses to accept credit and debit card payments through a mobile device designed by Soft Space. Both companies have signed a joint venture (JV) agreement to establish MOLCube Sdn Bhd which is 65% owned by MOL and 35% by Soft Space. The company has a paid-up capital of RM2mil and the management has plans to raise its working capital to RM20mil. As for the existing transaction payment acquisition partners that Soft Space has, founder and chief technology officer Chang Chew Soon said that there would not be any conflict as they would become MOLCube partners "working very closely with us rather than becoming competitors". "There is no difference from working with only Soft Space, just that now we are working on a bigger scale, with a wider reach and we are going to have a lot more partners," he told a press conference after the JV signing ceremony here yesterday. MOL expects to double its payment volume to RM3bil by the end of next year through the JV. "With MOLCube, the merchants that we can reach and secure will be many. If we reach 50,000 merchants, we estimate we can process RM1bil worth of transactions easily," said MOL Global group chief executive Ganesh Kumar Bangah. Currently, MOL has presence in eight countries. It plans to enter Vietnam, Turkey, the United States and Brazil by year-end. Ganesh said that MOLCube intended to participate in the Digital Malaysia programme which has projects like the Asian e-Fulfillment Hub and Enabling e-Payment Services for Small and Medium Enterprises (SMEs) and micro enterprises, "We have been in touch with Multimedia Development Corp and SME Corp but they have asked for proposals. "MOLPay has already applied and MOLCube will also be applying," he said. "Yes, we have intention to participate for both our e-commerce and mobile payment systems." Asked why Soft Space chose a homegrown company over foreign establishments, Chang said the businesses of the two companies complemented each other. "The reason why we chose MOL was because of its extensive knowledge in detecting credit card fraud and security. We are good on the technology side, so this is a good marriage," Chang said. The device is tentatively priced at RM300 and MOLCube aimed to roll out the devices by the end of this quarter at 7-11 stores for the consumers. MOL also aimed to launch the technology with a pilot group of merchants under tycoon Tan Sri Vincent Tan's group of companies. Soft Space is a subsidiary of Feotus International Sdn Bhd, of which Datuk Vincent Lee is executive chairman. |
| Maybank may be able to raise RM2.64bil via shares placement Posted: 05 Oct 2012 06:16 PM PDT PETALING JAYA: Malayan Banking Bhd (Maybank) could potentially raise about RM2.64bil in a bid to further strengthen the bank's capital base and facilitate to meet more stringent capital requirement under the Basel III framework. It intends to place out 300 million shares or 3.68% of its capital base at an indicative placement price of RM8.80 per share. In filings with Bursa Malaysia, the country's largest bank said the assumption of the issue price was based on a 3% discount to the weighted average market price of Maybank shares for the five market days up to Oct 4 of RM9.0757. "The final number of new Maybank shares to be issued and the issue price of the shares will only be determined and announced after the completion of the book-building process, which will commence on Friday," it said. It said there is also possible upsize of the placement depending on investors' demand. "The board is of the view that the proposed private placement is the most expeditious means of strengthening the company's capital base," it said. Maybank said the proceeds from the share sale, net of expenses relating to the exercise, would be utilised for working capital and general banking purpose. The bank ended the day nine sen, or 1%, lower at RM8.99 yesterday. In line with the world's adoption to Basel III, banks across the world would have to have a common format for disclosing the size and quality of their capital safety buffers from 2013 to help reassure investors they are stable. It would also force banks to hold more capital and liquidity from 2013 onwards and will require banks to hold at least 7% of core Tier 1 capital in the form of retained earnings or pure equity. Recently, Maybank had also succeeded in pricing its US$800mil (RM2.4bil) Regulation S Tier 2 Capital Subordinated Notes under its US$5bil multicurrency medium term note programme. The proceeds from the notes were also used for working capital, general banking and other corporate purposes, the bank had said earlier. The subordinated notes wereexpected to qualify as Lower Tier 2 capital as per the Bank Negara's guidelines and be eligible for Basel III transitional treatment. It is the largest regulation US dollar lower tier 2 capital issuance by an Asian Bank outside Japan and also marked the largest ever US dollar bond issuance by a Malaysian financial institution. The said transaction was priced at 5-year US Treasury + 260 bps or a yield of 3.254% and will pay a coupon of 3.25% per annum, to be paid semi-annually in arrears. The subordinated notes had a tenure of 10 years from the issue date on a 10 non-callable 5 basis, maturing on Sept 20, 2022. |
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