Home > Uncategorized > Boustead Plantations set to raise RM928m

Boustead Plantations set to raise RM928m

PETALING JAYA: Boustead Plantations Bhd’s initial public offering (IPO) is expected to raise close to RM1 billion, said Boustead Holdings Bhd deputy chairman and group managing director Tan Sri Lodin Wok Kamaruddin.

“We have received shareholders’ approval for the listing of Boustead Plantations,” he said at a briefing, here, yesterday. “Based on an indicative offer price of RM1.60 a share, the IPO should be able to raise RM928 million. The listing is slated for mid-June. As of now, there are no cornerstone investors,” Lodin said.

He noted that the Boustead Plantations IPO is timely because the price of crude palm oil (CPO) is on the uptrend. “At the moment, CPO price is averaging RM2,675 per tonne. In view of the Ramadan month starting in June, palm cooking oil buyers from Muslim nations are set to stock up on this kitchen staple in preparation for the Aidilfitri celebration. This is set to boost CPO prices,” he said.

It was reported that Boustead Plantations will be selling up to 41 per cent of its shares, of which 10 per cent is for institutional investors and 31 per cent for retail subscription.

In July 2013, Boustead Holdings Bhd paid RM2.30 a share for the 46.6 per cent it did not already own in Al-Hadharah REIT. After the corporate move, Boustead Plantations now controls 83,636ha of oil palm estates and 10 mills across Malaysia.

Boustead Holdings group finance director Daniel Ebinesan, who was present at the briefing, said the group borrowed close to RM600 million to take Al-Hadharah REIT private. “Following the Boustead Plantations IPO, we hope to channel RM390 million of the funds raised to repay a portion of this bank borrowing,” he said.

Currently, Boustead Plantations has planted up 71,092.7ha, some 85 per cent of its landbank.

On its growth prospects, Lodin said about RM420 million, or 45 per cent, of the IPO  proceeds will be set a side to buy earnings accretive,  mature plantation estates in Malaysia. 

“We’ll put aside RM420 million to expand our plantation landbank. Although we do not rule out overseas expansion in the long term, our immediate  focus is within Malaysia,” he said.

In raising productivity at its oil palm plantations, Lodin noted that the group will replant old trees with higher-yielding planting materials supplied by its associate Applied Agricultural Resources Sdn Bhd  (AAR).

   AAR, an equal joint-venture between Boustead Plantations and Kuala Lumpur Kepong Bhd (KLK), started breeding high-yielding hybrids on experimental plots more than 25 years ago.

  At prime fruit-bearing age, AAR’s semi-clonal seedlings, grown under good management and environment, are capable of producing more than 30  tonnes of fresh fruit bunches with over 23 per cent  oil extraction rate. That works out to about seven  tonnes of oil per hectare in a year, almost two times higher than the country’s average yield.

    Like their peers, Boustead Plantations and KLK have  invested heavily in oil palm breeding and cloning. High density planting and usage of semi-clonal materials will enable these companies to get better oil yields — consistently.

     “We started high-density replanting in 2008.  When we replant with these compact hybrids, we can pack in between 148 and 160 trees in one  hectare instead of the national standard of 136. With more optimal fertiliser application, these semi-clonals can help raise yields at our estates by at least 10 per cent,” Lodin said.

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