'Why is gov't selling 60pct of FGVH shares?'

Questions have been raised about the government's unexplained decision to cash out 60 percent of its shares in Felda Global Ventures Holdings Bhd (FGVH).

In a statement, DAP national publicity secretary Tony Pua asked why the government is “so desperate” to sell its stake for the RM5.5 billion this would generate.

He pointed out that, of the RM9.96 billion to be raised through the initial public offering (IPO) exercise, only 40 percent will accrue to FGVH for its operations and expansion purposes.  

“The prospectus had listed that, of the RM4.46 billion expected to be raised for FGVH, 87.7 percent will be utilised for investment purposes such as acquisition of plantation assets, oil and fats manufacturing facilities and businesses as well as other upgrading capital expenditure,” he said.

“However, the balance of 60 percent of the IPO proceeds will go towards the government, via the Felda statutory body. The amount raised by the government will be even larger than the amount raised by FGVH at RM5.5 billion.”

Pua noted that there is absolutely no mention as to why the government would need to raise as much as RM5.5 billion by cashing out its shares in FGVH.  

“The only known use of the money to be collected is to distribute a 'windfall' payment of RM15,000 to each Felda household, expected to cost RM1.69 billion.  

“In fact, the government is selling out so much that its ownership of FGVH is reduced from 100 percent to only 40 percent.”

The decision is unusual, said the Petaling Jaya Utara MP who cited the recent Facebook IPO as an example, as the founders and investors only sold a 25 percent stake, retaining 75 percent. 

Gov’t contradicting PM?

At the launch of the FGVH prospectus on May 31, Prime Minister Najib Abdul Razak had said that the FGVH listing will turn the “domestic organisation into a global player”.

“This fulfils our aim of transforming Felda from a domestic and local organisation to making the quantum leap as a global player that is important and successful,” he said.

The government’s decision contradicts Najib's statement, said Pua, as it has no reason to massively cash out its ownership of FGVH if the company is making a "quantum leap as a global player" as the premier has claimed.

“If the words of the prime minister are to be believed, shouldn't the government hold its shares in FGVH for as long as possible to reap the 'quantum' returns expected in the coming years? 

“In addition, the government is selling its stake at a time when global investors are viewing the markets negatively, which means that it will not get the best price for its shares.” 

Pua, who has been questioning the FGVH listing, reiterated that such desperation is also compounded by the devious manner in which the FGVH profits are being padded with cannibalised incomefrom Koperasi Permodalan Felda, to the tune of more than RM500 million annually.

“Given the huge sum of money involved as well as the interests of 112,635 settlers at stake, we call on the government to be completely transparent and accountable in the FGVH IPO exercise that is inundated with question marks,” he added.