FGV, Tabung Haji to Sell Assets in Indonesia
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JAKARTA (TheInsiderStories) – Palm oil giant Felda Global Ventures Holdings Bhd (FGV) and the Malaysian pilgrim’s fund, Lembaga Tabung Haji (LTH), are reportedly looking to sell their shares in Trurich Resources Sdn Bhd (Trurich), which owns plantation assets in Kalimantan Indonesia, at a price of US$1 billion.

The decision was taken due to the FGV and LTH, the government-linked entities, seek to improve their financial position. Now they are working with an adviser to gauge potential buyer interest in Trurich which controls 42,000 hectares (or 103,800 acres) of oil palm estates in Kalimantan.

They may seek to value Trurich at as much as US$1 billion including debt, people with knowledge of the matter said to Bloomberg, asking not to be identified because the information is private.

Prime Minister Mahathir Mohamad has been seeking to clean up the balance sheets of state-backed companies after a global scandal erupted over the previous government’s stewardship of the 1MDB (Malaysia Development Berhad) investment fund.

Since coming to power in a surprise election win last year, he has pledged to improve transparency at Malaysia’s government-linked firms and apply more scrutiny to their business dealings as part of an anti-corruption drive.

The deal would help Trurich’s owners offload assets that have been the subject of contention. Trurich said, in December, it filed a police report alleging that former senior management of the pilgrim’s fund misled the company into overpaying for Indonesia land purchases between 2008 and 2009. The executives haven’t publicly responded to the allegations.

So far, FGV and the pilgrim’s fund haven’t made a final decision on whether to sell, and they may decide to keep the assets if they can’t fetch an attractive price. Representatives for FGV and LTH not yet give the comment.

The Malaysian finance ministry agreed in December to take over as much as $4.8 billion of underperforming assets from LTH, which helps Muslims save for a pilgrimage to Mecca.

The rescue will help revive the fund’s balance sheet by offloading equity investments with significant unrealized losses. FGV swung to a net loss of $50.55 million in the fourth quarter of last year, from a net income of $12.20 million a year earlier.

The company has been focused on implementing new controls to bring its plantations’ performance in line with other large players in the industry, group chief executive officer Haris Fadzilah Hassan said in February.

A number of plantations are coming up for sale amid forecasts that crude palm oil prices will recover later this year. Sime Darby Plantation Bhd has been considering the sale of a stake in its Papua New Guinea unit and is reviewing its Liberia operations. PT Triputra Agro Persada’s owners, including GIC Pte, reportedly are exploring a sale of the Indonesian palm oil producer.

Written by Lexy Nantu, Email: lexy@theinsiderstories.com