Malaysia launches $3 billion IPO with eye on poll

Thu May 31, 2012 2:14am EDT
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By Stuart Grudgings and Yantoultra Ngui

KUALA LUMPUR (Reuters) - Malaysian Prime Minister Najib Razak unveiled on Thursday the $3.3 billion listing of palm oil giant Felda Global, paving the way for Asia's largest initial public offering so far this year that could also lift his chances of winning a national election.

The 58-year-old leader released the prospectus for the IPO of Felda Global Ventures Holdings (FGVH) at an event in the capital Kuala Lumpur that was as much political theatre as a financial announcement.

The listing is expected to raise 10.5 billion ringgit ($3.3 billion) based on the price for retail investors of 4.55 ringgit per share, giving it a market capitalization of more than 16 billion ringgit ($5.1 billion).

"The reason for the listing is to create wealth for Malaysians," Najib said in a speech. "There is no other way to create wealth in such a fast pace than listing."

The world's largest IPO this year after Facebook has already attracted a strong cast of cornerstone investors including French agribusiness giant Louis Dreyfus, Fidelity Investments and Middle Eastern sovereign fund Qatar Holding LLC.

That partly reflects strong investor interest in Southeast Asia, which has seen a burst of IPOs since the start of the year despite the protracted euro zone debt crisis, the debacle over Facebook's market debut and shaky IPO markets elsewhere in Asia.

The strong support from cornerstones, which are taking up about two-thirds of the IPO shares, and from Malaysian states in which the plantations are located, means the deal is unlikely to suffer the same fate as the social networking giant or the flurry of Hong Kong share sales that have been shelved recently.

There is also significant political capital invested in the sale, which is set to deliver a windfall totaling more than $500 million to tens of thousands of farmers in what is likely to be an election year.   Continued...

Malaysia's Prime Minister Najib Razak shouts "Long Live Felda" at the end of his speech to farmers at the Felda Jengka 8 plantation, near town of Jerantut, 170 km (106 miles) east of Kuala Lumpur May 8, 2012. REUTERS/Bazuki Muhammad