SHAH ALAM, Nov 10 — Prime Minister Datuk Seri Najib Razak today handed out a RM563 million windfall to second-generation oil palm plantation settlers even as shares of Felda Global Ventures Holdings (FGVH), the second-largest initial public offering (IPO) in the world this year, slid in the last one week due to concerns over weak earnings from plantation companies.
The shares of the plantation giant had traded as low of RM4.59 on November 8, just shy of the record low of RM4.57 recorded on September 11.
“Today’s award is a promise fulfilled by the Barisan Nasional (BN) government and which denies the accusations by the opposition that says Felda will go bankrupt.
“This is the third phase of the windfall from the government to settlers, even though it is still insufficient until the time for the general election,” Najib (picture), who is also finance minister, said when officiating the Felda new generation gathering here.
Each of the 112,635 Felda families nationwide will receive about RM5,000 as part of the third and final phase of the financial windfall the government promised this year in its move to grow the federal land development authority’s profits by listing FGVH on the stock market.
FGVH is a 100 per cent subsidiary of Felda, a statutory body under the Prime Minister’s Department.
The group had raised some RM10.5 billion from the IPO when it debuted on Bursa Malaysia in June, which earned its main shareholder about RM6 billion while FGVH took up the remaining RM4.5 billion to expand its operations.
The first round of handouts valued at RM5,000 was dished out to the first-generation of settlers in May, while the wives of settlers were given RM5,000 each in the second phase last July.
Plantation companies have been under pressure from low palm oil prices, which are down by about 25 per cent so far this year and the Plantation Index was down 0.4 per cent yesterday to finish at 8,080.9.
In addition to low palm oil prices, FGVH could also struggle with its ageing oil palm trees that account for 53 per cent of the 320,000 hectares of oil palm estates which rank among the highest in the industry and a replanting exercise would mean even more loss of income for the group during the period it takes for trees to mature.
FGVH also reportedly suffers from a productivity issue in terms of tonnes per hectare that ranks as the third lowest among the major Malaysian plantations firms.
The Employers Provident Fund (EPF) however has continued to accumulate shares of FGVH, snapping up 250,000 shares yesterday, bringing its total direct stake to 7.78 per cent.
EPF, the country’s largest pension fund, said in September that it was buying into FGVH as it had an extended and positive view on the plantation sector, which is one of the cyclical sectors which has its ups and downs.