Syed Mokhtar could be a good fit for FGV

By Zaidi Isham Ismail
 

Tan Sri Syed Mokhtar Al-Bukhary is no stranger to corporate Malaysia.

His business empire spans from power to ports, postal, infrastructure, media, plantations and so many others.

Thus it came as no surprise that the elusive tycoon proposed recently to take over Felda Global Ventures (FGV).

Syed Mokhtar's special purpose vehicle Perspective Lane had proposed to take over 20 percent of FGV.

Not to be confused, FGV is the listed commercial arm of government-owned Federal Land Development Authority or Felda.

This announcement did not come as a surprise as FGV has long been in the doldrums.

From its hyped up listing in 2012, FGV has lost 75 percent of its share price value to current levels of around RM1 compared to its initial public offering price of RM4.55.

But to be fair, FGV also could not escape the vicious cycle of crude palm oil prices which have contributed to its downturn.

Syed Mokhtar also owns some 100,000 ha of oil palm plantations under Tradewinds Plantations which would fit hand in glove with FGV's estimated 380,000ha landbank.

However, Syed Mokhtar has to manage the oil palm estates delicately because unlike his own plantations, the estates managed by FGV are mostly owned by smallholders.

"The issue has to be dealt with kid gloves taking into sensitivity of all quarters," said a former FGV official.

"It is time something moves in as FGV has been either making losses or little profit for the past few years," said the observer.

Although, FGV cannot be blamed entirely due to the weak crude palm oil prices, the company should shoulder some of the blame.

Analysts have always avoided FGV due to its low valuations and poor earnings potential.

"Stockbroking houses have always preferred other plantation firms such as United Plantations or IOI Corp.

This is because FGV is beset with legacy issues such as aging oil palm trees of more than 25 years old as well as sustainability issues.

The marriage of FGV and Syed Mokhtar's Tradewinds Plantations would be a good fit as both entities have operations in oil palm and sugar respectively.

The amalgamation would consolidate Syed Mokhtar's position as his own Central Sugar Refinery will join forces with FGV's sugar arn MSM Holdings.

Furthermore, Syed Mokhtar who is one of Malaysia's richest men has a good track record in turning around ailing companies.

The merger is long time coming as FGV's image has been waning for far too long.

But what is important right now is that the livelihoods of Felda's three million smallholders' families will be looked after and right now, Syed Mokhtar is the best man to do it. - DagangNews.com

The writer is former NST Business assistant editor