Felda's EHP buy opens door to Indonesian market

With the acquisition of a 37 per cent stake in Indonesia's PT Eagle High Plantation Tbk (EHP), the Federal Land Development Authority (Felda) will now have two plantation arms, namely Felda
Global Ventures Holdings Bhd (FGV) and EHP to maximise its investment returns.

Felda deputy director-general (management) Muzzammil Mohd Nor said there would be a lot of collaborations and cross-selling between the two companies.

"Both FGV and EHP have their own strengths and we will ensure that there will be synergistic relationship between the two companies," he said in an interview, today.

Muzzammil said the deal would not only be a positive development for Felda but would also help to realise the potential establishment of the Council of Palm Oil Producing Countries (CPOPC) which the Malaysian and Indonesian governments had been discussing.

The CPOPC represents an initiative for both countries to fully share and utilise their position as global palm oil producers.

This would be beneficial for palm oil end users as a more synchronised standard between the two countries can be established.

The deal also, Muzzammil said, portrayed a significant part of Felda's effort not only to grow bigger but also to have a bigger voice in the world commodity market.

It is also strategic as EHP owns approximately 320,000 hectares of land bank with about a third of it already planted and entering its growth cycle.

Furthermore, the investment allows Felda to make significant inroads first-hand to the Indonesian domestic market of about 260 million people.

He said when it was clear that Felda's plantation unit, FGV could not move the deal forward due to some constraints that it faced, it started to look into the best way for Felda to step in.

As a non-listed entity, Felda is not restricted by movement of share prices, but it still took a cautious approach in realising the deal to ensure that the institution would not be impacted negatively even in a worst-case scenario.

"Felda is an important social institution, it could not just jump into a deal without following proper due diligence and adhering to good governance," he said.

As Felda is investing in its core business which is palm oil plantation, Muzzammil said the EHP investment represents a golden and probably the last opportunity for it to expand its palm oil plantation land bank globally.

- Bernama