The Employees Providence Fund's (EPF) divestment of its entire stake in Felda Global Ventures (FGV) has raised questions over the viability investments by other statutory bodies.
Two major FGV shareholders are the Retirement Fund Incorporated (KWAP) and Lembaga Tabung Haji. These institutional investors mostly invested in FGV during the initial public offering stage.
National Felda Settlers' Children's Association (Anak) president Mazlan Aliman told Malaysiakini that there are other institutional investors with stakes in FGV such as the Pahang state government, the Armed Forces Trust Fund (LTAT) and the Social Security Organisation (Perkeso).
But by far the biggest shareholders is Felda itself (20 percent), followed by its subsidiary Felda Assets Holding Company Sdn Bhd (13 percent).
Mazlan said his calculations led him to believe that FGV's book loss was now more than RM5 billion.
“The Felda Capital Cooperatives, which invested RM800 million in FGV, is suffering double losses.
“After its 51 percent equity in Felda Holding was taken over by FGV at RM2.2 billion, RM800 million from the sum was invested as shares and they are suffering losses,” he said.
The estimated figure, however, does not take into account any profits from transactions of shares over the years.
EPF cutting losses
According to Bursa Malaysia records, EPF was allotted a 5.06 percent stake or 184,746,000 shares in FGV during its market debut on June 28, 2012.
Based on the figure, its initial investment would amount to some RM840.5 million.
A month after the IPO, FGV’s shares peaked at RM5.55 per share.
By September the same year, EPF has increased its stake in the company to 6.8 percent, although FGV's share price was starting to slide.
Within two years, FGV's share price halved, following a drop in commodity prices and downstream losses.
By March this year, Reuters data however showed that EPF only held a 3.85 percent stake in FGV and was ranked as the seventh biggest shareholder.
The fund’s announcement on Tuesday, as such, demonstrated that there was a crisis of confidence in FGV.
Previously, EPF had voiced concerns over the FGV's investment decisions, including the abandoned proposal to acquire Indonesian palm oil firm High Eagle at a high price.
KWAP to the rescue?
While market analysts have predicted that the negative sentiment may be temporary, FGV’s critics have urged all of its institutional investors to come clean on any losses incurred.
FGV’s share prices slipped by 4.94 percent or eight sen to RM1.54 at midday on Wednesday with 6.98 million shares changing hands.
When markets closed on Friday, FGV shares were last traded at RM1.53.
KWAP, meanwhile, was allotted 194 million shares or a 5.3 percent stake during FGV’s IPO at a total price of RM882.7 million.
KWAP’s stake in FGV today stands at 7.308 per cent or 256,773,600 shares, with the latest acquisition of 1 million shares recorded on Nov 15.
Tabung Haji on the other hand had acquired some 283.71 million shares for nearly RM1.3 billion. As of today, Tabung Haji has maintained its hold on 287,192,600 shares.
In February this year, PKR vice-president Rafizi Ramli had alleged that Tabung Haji had incurred a paper loss of almost RM1 billion for investing in FGV by estimating the shares to be now worth around RM450 million.
Collectively, the three public institutions had invested some RM1.7 billion in what was touted as the year’s second largest IPO in the world in 2012.
Felda settlers bearing the brunt
Aside from institutional investors, Felda settlers were each made to invest in 800 units of FGV shares each, at a total cost of RM3,640.
It was speculated at the time that most of settlers had to take secure bank loans to purchase the shares, resulting in some resistance due to the uncertainties involved.
Post-listing, Felda however announced that the government had taken over all of the loans with an allocation of RM360.7 million.
According to the agreement, settlers now have to pay Felda RM50 per month for an interest free loan, deducted from their monthly collection.
Mazlan pointed out that the settlers are still burdened with making payments for shares which had significantly dropped in its value.
“We have consistently urged Felda to dispose of the settlers’ shares but instead they just take over the loans,” he said.
Although there are many concerns regarding the government-linked companies or public funds refusing to dispose of their stake in FGV, there is little being offered by these entities to assuage worries.
