Felda defies uncertainty to jump on debut Shares in Felda Global Ventures, the world's third-largest palm oil estates operator, jumped as much as 20 per cent on their debut, defying global market uncertainty for big-ticket listings. The shares were priced at M$4.55 for institutional investors in an offering of 2.2bn shares that raised about US$3.2bn. They started trading at M$5.39 on Thursday on the Malaysian stock exchange, rising as high as M$5.46 before closing at M$5.30, up 16.5 per cent. The listing of FGV saw shares allocated overwhelmingly to cash-rich Malaysian pension funds and about 10 cornerstone investors including Fidelity as well as the sovereign wealth funds of Singapore and Qatar. That ensured a strong start for the listing, even as volatile global market conditions have forced the postponement of many similarly sized IPOs recently. Shares were also allocated to 112,635 farmers who have worked on Felda palm oil estates since Felda was established in 1956 as a massive land redistribution programme. The institutional tranche had been set some weeks ago at M$4.65, at the top of a range of M$4-M$4.65. But weakening palm oil and crude oil prices globally prompted a downward revision to M$4.55, bankers said. The FGV listing comes amid doubts over the company's prospects, however, since more than half of trees on the 343,521 hectares of estates the company operates are old and near the end of their productive life. After the listing, Mr Ahmad said the downward revision in the institutional price had been "the correct strategy." "We left something on the table, especially for the settlers and Malaysian retail investors," he said. The joint global co-ordinators were CIMB and Maybank, two of Malaysia's largest banks, and Morgan Stanley. JPMorgan Chase and Deutsche Bank were included with the same banks as joint bookrunners. The company's plan to replant 15,000 hectares a year up to 2015 would be sufficient to deal with the relatively high number of older trees in FGV's portfolio, he insisted. When you do replanting, it's a major exercise. You must do it properly, especially in terms of quality control. I wish we could do it at a rate of 25,000 hectares a year but then you have cash flow issues, since you generally don't get a crop for about four years," Mr Ahmad said. Mr Ahmad estimated that the cost of replanting over three years would be M$14,000 a hectare, resulting in a total replanting investment for FGV until, and including, 2015 of M$280m (US$87m). FGV also reported a 36 per cent fall in first-quarter profit. Efforts to finalise a marketing and palm oil distribution joint venture with Louis Dreyfus Commodities, the Swiss trading house, have still not been approved by both companies" boards. Asked when it would be finalised, Mr Ahmad said: "The decision is more or less at the final stage."