Prior to 13th General Election, Felda was a major political issue and the listing of FGV was negatively potrayed by opposition.
The 14th General Election is coming soon. Initially, it was predicted to be early 2017, then October 2017 and lately, there are some predicting it to be 2018.
Felda will always be a political issue because there are 57 Parliamentary seats with Felda in the constituencies. Plus state assembly seats, it could be as many as 100 seats.
The likely issue this time is Felda (through Felda Investment Company (FIC)) purchase of PT Eagle High Plantation Tbk (EHP) in Indonesia.
FGV had aborted the offer to buy 37% of EHP.
The deal was also heard rejected by FIC and passed over to Felda, the statutory body before it was finally passed back to FIC.
FIC recently announced to buy the same block at US$505.4 million, which is lower than the first offer to FGV at US$680 million and subsequent offer at 15% discount lower.
This deal was made controversial because CIMB, this time by the Chairman Dato Nazir Abdul Razak, kept calling the offer price as too high a premium.
Opposition politicians are riding on their call.
The not so knowledgeable and purely political rhetorics Dato Ezam Md Nor is hoping Felda can be an issue for him to relaunched his failed political career.
When politicians join in the act, the actual investment and corporate governance issues will be lost.
The usual shallow brickbat will gain the headline.
When Felda issue for GE 14 is played out, past issues surrounding the listing of FGV in 2012 will be revived.
Kinibiz did a 4-part series in March 2013, during the heat of campaign - Part 1, Part 2, Part 3, and Part 4. How much predicted turned out true?
Back then, the video below was distributed to settlers to explain the issue:
It is good to recall back the explanations and remind those involved with Felda of the promises they made to settlers and other stakeholders of the globalisation plan to list FGV.
By 2015, FGV was seen by settlers and market as not meeting its expectation [read The Star May 2015 here].
The biggest oil palm company in the world was removed from the Bursa Malaysia's FTSE index list in early June,
With negative sentiment against FGV revived, the mid-June 2015 announcement to buy the EHP stake can only be expected not to be well received.
The concern on accepting the EHP was the overvaluation and debt level of FGV and EHP. It was also spin as a bailout for Peter Sondakh [read LSS here].
By July 2015, it was called off.
There was attempt to revise the price but by October 2015, new CEO Dato Zakaria Arshad made it clear FGV will not be on an acquisition trail but to focus on its core business [read The Edge here].
The operation rationalisation strategy was laid out recently on January 2, 2017 [read NST here].
However, Felda Group have not forgotten EHP. Non-listed FIC announced they have agreed to buy the EHP stake offered on Christmas Eve [read here].
Felda defended the back-door purchase [read FAQ here]. It is a similar argument to Dato Emir Mavani defense of FGV purchase at a higher price before he was replaced [hear the Bloomberg interview here].
One concern with the FIC purchase is it seemed to have deviated from the original purpose of its establishment. It is basically the re-establishment a second Felda Holding that was listed as FGV.
Taken from their website here:
FIC is responsible to undertake business activities, which are non-plantation related and at present, it is principally involved in the areas of property development; hospitality; and other strategic investments. The main objective of FIC is to focus on strategic businesses via acquisitions or collaborations that may benefit the company and its stakeholders in the long run.Perhaps EHP could be considered a strategic investment. But where do FIC derived its funding to undertake past and the current M&A exercises?
It is the insatiable appetite for M&A by FGV that broke the camel's back for EPF. They announced selling off all their holding in FGV on December 22nd. [Read NST and The Star here and here]
Be it FGV or Felda or FGV or Koperasi Felda, all are intertwined to each other. One bad news will affect others.
Unless settlers matters urgently addressed, fragile sentiment heard at the ground among second, and third generation settlers could worsen.
Those are voters. A sigh can be heard from afar, "Not again ... please."