Felda Global Venture’s Indonesian deal a bailout for Najib crony, say bankers
(TMI) – Portfolio investors and bankers are panning the acquisition, arguing that the deal is hugely expensive for Felda and smacks of a bailout for the Sondakh, who enjoys close ties to Malaysian Prime Minister Datuk Seri Najib Razak.
State-controlled Felda Global Ventures Bhd, Malaysia’s largest listed plantation company, is touting its US$746 million (RM2.8 billion) purchase of a clutch of plantation and sugar assets owned by Indonesian tycoon Tan Sri Peter Sondakh as a demonstration of economic integration among the 10-member Asean.
But portfolio investors and bankers are panning the acquisition, arguing that the deal is hugely expensive for Felda and smacks of a bailout for the Sondakh, who enjoys close ties to Malaysian Prime Minister Datuk Seri Najib Razak.
Coming on the heels of the widening furore surrounding debt-laden sovereign fund 1Malaysia Development Bhd (1MDB), the deal is raising serious corporate governance concerns over the management of so-called government-linked companies which dominate the Malaysian economy and use of public funds.
Shares of Felda Golden Ventures were beaten down to record lows this week following the announcement of its proposed acquisition of a non-controlling majority equity interest in a listed plantation group called PT Eagle High Plantations and another 95% of a sugar project on the remote island of Indonesian Papua, both owned by Sondakh’s Rajawali Group.
Under the transaction, Felda is proposing to pay US$679 million for a 37% stake in Eagle High and another US$66.5 million for the sugar assets.
The price tag is too high, say investment analysts tracking the Malaysian plantation company, which floated its shares on the local bourse in mid-2012 and currently ranks as one of the country’s worst performing stocks among state-controlled entities.
