Malaysia state firm weighs IPO for $1.39 billion palm oil arm

An IPO in Kuala Lumpur for plantation unit Kulim Malaysia could happen as early as next year. PHOTO: REUTERS

KUALA LUMPUR (BLOOMBERG) - Malaysia's state-owned investment firm Johor Corp could seek to raise about RM1 billion (S$316.4 million) in an initial public offering of its plantation unit, according to sources with knowledge of the matter.

The investment arm of the Johor state government is asking bankers for pitches for the potential listing of Kulim Malaysia, and is targeting a valuation of around US$1 billion (S$1.39 billion) for the unit, the people said. An initial public offering (IPO) in Kuala Lumpur could happen as early as next year, said the sources.

The Kulim listing would come as a three-year rally in crude palm oil prices has sputtered out. Gains for the year have been wiped out, as supplies increase in Malaysia and Indonesia and petroleum prices slide.

Deliberations are ongoing and details of the IPO such as size and timing could change, the people said.

Johor Corp is continuously reviewing its investments, and is committed to improving the value proposition of Kulim, said Ms Hasnina Hafiz, head of group corporate communications, in response to a query from Bloomberg News.

Should Johor Corp proceed with the plan, Kulim will be joining Malaysia IPO candidates including Weststar Aviation Services' helicopter services unit and QSR Brands (M) Holdings, which runs KFC and Pizza Hut restaurants in South-east Asia.

Malaysia hosted US$408 million worth of IPOs so far this year, up from US$130 million in the same period in 2021, data compiled by Bloomberg show.

Kulim traces its roots to 1933, when Kulim Rubber Plantations was incorporated in the UK, according to its website.

It was listed on the Kuala Lumpur stock exchange in 1975 and Johor Corp became a major shareholder of Kulim a year later. The state-owned firm took Kulim private in 2016.

The agricultural company has 55,796ha of planted areas with oil palm trees in Malaysia and 7,362 hectares in Indonesia, the website shows.

Along with plantation, Kulim's core business areas are fruit and vegetable farming, livestock and trading and services.

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