At the launch of the FGVH prospectus on 31 May 2012, the Prime Minister, Dato' Seri Najib Razak said that the company's 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 when launching the prospectus for the initial public offering (IPO) that is set to raise around RM9.96 billion.
However, if it is indeed the case that FGVH will make the "quantum leap as a global player", why is the Government massively cashing out on its ownership of FGVH?
Out of the RM9.96 billion to be raised, only 40% of the money will accrue to FGVH for the company's operations and expansion purposes. The prospectus had listed that out of the RM4.46 billion expected to be raised for FGVH, 87.7% of the funds 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.
However, the balance of the 60% 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.
There is absolutely no mention of why the Government would need to raise as much as RM5.5 billion by cashing out on its shares in FGVH in the listing prospectus. The only known use of the money to be collected is to distribute a "windfall" payment of RM15,000 to each Felda household, expecting to cost RM1.69 billion.
In fact, the Government is selling out so much that its ownership of FGVH is reduced from 100% to only 40%.
In contrast, using the recent Facebook IPO as an example, the founders and investors of the company only sold a 25% stake, retaining 75%. However, for some strange reason, the Government sees it necessary to immediately reduce its stake massively in FGVH by 60%.
The above action by the Government therefore begs the question, if FGVH is truly going to be "transformed" into a massively profitable global company, why is the Government cashing out as if it cannot wait to get rid of its stake? If the words of the Prime Minister were 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.
Such desperation, compounded by the devious manner by which the profits of FGVH are padded with cannibalised income from Koperasi Permodalan Felda (KPF), which represents the interest of the Felda settlers to the tune of more than RM500 million annually points to the fact that there's much more than it meets the eye.
Given the huge sum of money involved as well as the interest of 112,635 settlers at stake, we call upon the Government to be completely transparent and accountable in the FGVH IPO exercise that is inundated with question marks.