by Tony Pua

The Prime Minister, Dato’ Seri Najib Razak has on 31 May 2012 said that Felda Global Venture Holdings’ (FGVH) initial public offering (IPO) will turn the “domestic organisation into a global player” at the launch of the company’s prospectus.

However, as listed on FGVH’s prospectus (pg 32), 5 Barisan Nasional-ruled states – Pahang (5%), Sabah (5%), Perak (0.4%), Terengganu (0.16%) and Negeri Sembilan (0.28%) – will be taking up 10.84% of the FGVH’s enlarged share capital.

These states have provided “irrevocable undertakings” to subscribe for the IPO shares. Based on the shares available to be subscribed by investors, the states are actually taking up 18.1% the funds to be raised, worth approximately RM1.8 billion.

If indeed the demand for FGVH shares is so hot as described by the Prime Minister, why is it that these BN states are being asked or even forced to give “irrevocable undertakings” to acquire such a substantial portion of the IPO shares on offer?

What makes it more perplexing is, the investment by these states is not meant to fund FGVH’s future investment and operations by subscribing to new FGVH shares being issued.  These states are acquiring their shares directly from FELDA, which means that the RM1.8 billion raised will go to the Federal Government, and not the company!

The question must be asked as to why is the Federal Government or FELDA is such desperate need for funds, firstly to massively sell down its stake in FGVH from 100% to only 40%, and secondly on why such desperation that it must even draw funds from the Malaysian states? -The Rocket