Felda Global will have an initial market capitalisation (market cap) of RM21 billion when it makes its Bursa debut, well above its current value of RM3 billion, Deputy Minister in the Prime Minister’s Department Datuk Ahmad Maslan said.
It will also be the biggest initial public offering (IPO) so far this year. Based on yesterday’s closing, Bursa Malaysia’s top 20 list was led by Malayan Banking Bhd with Sime Darby Bhd in second spot, recording market caps of RM64.9 billion and RM57.7 billion respectively.
With a RM21 billion market cap, Felda Global may come in at number 16 of the bluechip list, sandwiched between Hong Leong Bank Bhd (RM21.7 billion) and PPB Group Bhd(RM20.9 billion).
Ahmad said the listing of the commercial arm of the government-owned Felda (Federal Land Development Authority) will enable it to raise billions of ringgit for expansion.
“However, I cannot reveal the number of shares to be floated and the price a piece.
Let the value be announced by the Prime Minister (Datuk Seri Najib Razak),” Ahmad told Felda’s 317 plantation scheme leaders, 3,000 settlers and 1,300 Felda personnel at a briefing on the benefits of the listing here yesterday.
An investment banker said Felda Global’s debut will rejuvenate the local stock market, put Malaysia on foreign investors’ radar and complement last year’s giant debuts of Petronas Chemicals Bhd and Malaysia Marine and Heavy Engineering Holdings Bhd.
Meanwhile, Ahmad said that preparations for the listing are 90 per cent complete, with balloting, prospectus release and other related matters to be announced later.
He said Koperasi Permodalan Felda (KPF) will hold its extraordinary general meeting on February 22 to decide whether it will approve the listing.
"But we agree that it can go below the trend in the first half and below five per cent in the first quarter of 2012, mostly due to seasonal factors in the first quarter," he said.
In its latest annual report on Malaysia, the fund said the country is well-positioned to face the challenging external environment but said public finances and structural reforms are crucial to raise the country's growth potential for a more balanced growth.
The IMF has projected Malaysia's economy to slow to four per cent in 2012 and expects inflation to ease and remain contained.
Although a slower growth is still credible under the circumstances, Dass is looking at a 4.8-5.5 per cent range in his GDP growth outlook for 2012.
"Our 5.5 per cent is on condition that the US data continues to be promising and if the momentum holds up, then the second half would be better. Likewise in the case of Europe, if there is a mild recession as projected and Greece does not default, the region could see a flat or 0.5 per cent growth.
"If all these fall into place and coupled with a 8.5-8.8 per cent growth for China, commodity prices will likely appreciate in the second half, which should benefit Malaysia," he said.
He also expects the electrical and electronic exports to pick up in the second half as inventory level has bottomed out.
Dass said the fund recognised the structural reforms taking place, albeit slow but "at least it is moving in that direction".
"Malaysia's public debt is still manageable, being more than 50 per cent of the GDP - which we don't want to rush to cut now otherwise we could choke growth - which we cannot afford to do now."
The Fund recommended that further efforts be in place to better target expenditure, broaden the tax base and enhance fiscal transparency.
On the structural reforms, Manokaran also agreed that they must be accelerated to to reduce the fiscal deficit to GDP ratio.
"The government should stress on prudent management during economic uncertainties, driving the message that both private and public sector need to help each other."
The IMF executive board in its latest report commended the authorities for Malaysia's strong macroeconomic performance in the aftermath of the global downturn. "Underpinned by robust fundamentals and policy frameworks, Malaysia is well positioned to face the challenging external environment in the period ahead," it said in the report released following its annual Article IV consultation with Malaysia on Monday last week.
The IMF directors supported Malaysia's current monetary policy. They saw room for lowering the policy rate if growth prospects worsen significantly. The directors noted that letting the exchange rate move flexibly in line with fundamentals while limiting excessive volatility would allow the real exchange rate to appreciate over the medium term.
The directors noted that Malaysia's financial system remains sound, well capitalised, and resilient. In case downside risks materialise, extraordinary support measures similar to those deployed in 2008-09 could be reinstated, they added.
The IMF directors said the significant increase in household indebtedness warrants close monitoring. "In this context, directors welcomed the prudential measures taken recently, including the introduction of guidelines to ensure that borrowers' debt is in line with their incomes," they said.
They looked forward to the upcoming Financial Sector Assessment Programme (FSAP) report.
The directors also welcomed the ambitious reform agenda to boost potential growth, based on comprehensive diagnoses of the bottlenecks that hinder investment and productivity. In particular, they stressed the need to improve the business climate, enhance competition, upgrade workers' skills, and create economic opportunities for all Malaysians. By Rupa Damodaran