Oil palm giant eyes NBPOL

 NEW Britain Palm Oil Ltd (NBPOL), which has market capitalisation of about K2.86 billion, is being eyed by Malaysia’s Felda Global Ventures Holdings Ltd (FVG).

FGV is the world’s third largest oil palm plantation player and in 2012, raised US$3.1 billion (about K8.6 billion) its IPO as the second largest IPO in the world after Facebook.

It is one of several private corporate entities set up by the Malaysian government’s FELDA (Federal Land Development Authority), an agency originally mooted to of help resettle the rural pool into newly-developed areas and to organise smallholder farms growing cash crops.

A Malaysian newspaper said there is strong speculation that the cash-rich FGV plans to acquire a major stake in NBPOL which is listed on the London Stock Exchange.

NBPOL has 77,000ha of oil palm plantations in PNG and the Solomon Islands, 12 palm oil mills and one refinery each in PNG and Liverpool, UK.

The group is the largest domestic sugar and beef producer in PNG via its over 7,700ha sugar cane plantations and 9,200ha of grazing pastures as well as a seed production and palm breeding facility.

Another Malaysian company, Kulim (M) Ltd, holds a 20% stake in NBPOL and its attempts to increase it to 68.97% in June last year was blocked by the Securities Commission of PNG, apparently to thwart foreign ownership. Kulim had offered close to K26 per share.

It applied to the Waigani National Court to lift the commission’s order but was rejected.

According to the commission, NBPOL is the pride of PNG and West New Britain, and a renowned flagship that floats their names on the international financial and commodity markets. 

“By far, it is the gold mine on the island that provides income for (a) vast number of families in the county. It is an integral and significant asset of this country,” the regulator had said when blocking Kulim’s bid.

“The commission sees that Papua New Guinea and its shareholders will be marginalised by a foreign company on their own land.”

FGV is likely to face the same reception as Kulim but Malaysian analysts say the company has the advantage of being the manager for FELDA smallholders’ land for decades.

One analyst pointed out that FELDA’s scheme model is one of the most successful land development schemes in the world, admired by many developing and emerging nations because it helps to alleviate poverty in the rural economy.

“This can be one of the major selling points for FGV to the NBPOL shareholders as currently about 25% of NBPOL’s oil palm fresh fruit bunches is supplied by over 15,000 smallholders there,” he told the newspaper.

“Hence, NBPOL may consider replicating the successful FELDA scheme model with the opening up of oil palm plantations to help its smallholders and farmers improve their income levels.”

NBPOL would also gain a wider global market access for its RSPO-certified palm products to over 10 countries which FGV operates in currently, he added.

For FGV appears keen to spread its risks to other countries apart from Malaysia and Indonesia as well as secure consistent raw sugar from NBPOL’s unit Ramu Sugar plantations for its sugar subsidiary, MSM Holdings Bhd in Malaysia.