Louis Dreyfus scales back Felda deal Louis Dreyfus Commodities of Switzerland on Friday scaled back its involvement in the stock market listing of Felda Global Ventures, Malaysia's largest palm oil operator by acreage, agreeing to buy 0.5 per cent of shares in the $3.2bn issue. The commodity trading group was to have been involved as a "strategic investor" with 2.5 per cent of the shares, signalling key foreign investor support for what would be the second-largest initial public offering after Facebook. But the arrangement ran into complications after Dreyfus did not make its investment by a mid-June deadline, triggering the offer of shares to other investors. The two sides were to have agreed a joint venture as part of the investment that would allow FGV to distribute its products more widely in North America, China, India and Southeast Asia. Louis Dreyfus Commodities" Asia unit said it had reached a final agreement with FGV over a "strategic partnership." "In acknowledgment of the strong result of the bookbuilding and demand for the FGV offering, Louis Dreyfus may reduce its participation in the enlarged issued and paid-up share capital," Dreyfus said, without specifying the number of shares it would buy. One person familiar with the matter said Louis Dreyfus would take a stake of 0.5 per cent and that a joint venture has been agreed. "The strategic partnership is a win-win for FGV and Dreyfus where both partners will be able to tap each other's strengths - FGV in its upstream and midstream activities and Dreyfus in its marketing and downstream capabilities - to create a major integrated player," Dreyfus said. The development is unlikely to affect plans for the IPO, which lists on Bursa Malaysia in a week. It still has the backing of a range of cash-rich Malaysian pension funds, as well as more than 10 "cornerstone" investors including Fidelity; Hong Leong Group, controlled by Quek Leng Chan, one of Malaysia's richest businessmen; and sovereign wealth funds of Qatar and Singapore. The FGV float has political significance in Malaysia, where Najib Razak, prime minister, faces a tough battle against a coalition led by Anwar Ibrahim, a veteran opposition figure. FGV is owned by Felda, a government agency that controls a land bank of 880,000 hectares of palm oil plantations and which was founded by Mr Najib's father, a former prime minister of Malaysia. It accounts for about 10 per cent of global production of palm oil, used in products from cooking oil to shampoo. About 3.5 per cent of shares in the IPO have been allocated to thousands of poor farmers on Felda plantations, while 11.5 per cent are set aside for ethnic Malays, or "bumiputeras." The government plans to sell down its stake to 40 per cent in the IPO. The joint global co-ordinators are CIMB and Maybank, two of Malaysia's largest banks, and Morgan Stanley. JPMorgan and Deutsche Bank are included with the same banks as joint bookrunners.