Petaling Jaya Utara MP Tony Pua is questioning whether the possibility of under-subscription for Felda Global Ventures Holdings Bhd’s (FGV) initial public offering (IPO), scheduled at the end of this month, may force the Barisan Nasional-ruled states to take a bigger stake in it.

NONE Pua, in a statement, said the FGV prospectus sees five BN-ruled states being scheduled to take a 10.84 percent stake of the company’s enlarged share capital.

These include Pahang and Sabah each having a five percent stake, while Perak (0.4 percent), Terengganu (0.16 percent) and Negri Sembilan (0.28 percent).

These five states, Pua said, 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 percent of the funds to be raised, worth approximately RM1.8 billion.

“If indeed the demand for FGV shares is so hot as described by the PM, 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,” the Petaling Jaya Utara MP asked.

At the launching of the FGV IPO on May 31, Prime Minister Najib Abdul Razak had said the company will turn this “domestic organisation into a global player”.

During the launching of the IPO, Najib expressed hope that its listing will be better than Facebook . The listing is said to be the largest IPO in Asia this year.

'Little value to organisation'

In fact, Pua stressed that the acquisition of such a big stake in FGV by the five states would add little value to the organisation, as the shares are being sold by the federal government-owned Felda, which plans to reduce its stake in FGV from 100 percent to 40 percent.

“Felda, which is a statutory body, already holds in trust the interest of all Malaysians and Malaysian states in FGV, so why is there a need to ask for money from the Malaysian states which are by far poorer than the federal government,” the MP queried further.

“What makes the deal more perplexing is that the investment by these states is not meant to fund FGV’s future investment and operations by subscribing to new FGV 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,” he stressed.

azlan Pua queried why the federal government or Felda is so desperately in need for funds, firstly to massively sell down its stake in FGV from 100 percent to only 40 percent, and why it must even draw funds from the five states to have the shares.

“Both the federal government and Felda have not responded to my earlier statement on what is the intended use of the RM5.5 billion that it will raise for itself from the sale of its shares in FGV.

"The sheer lack of transparency does not bode well for Felda or FGV as surely, the people will be convinced that there is more than it meets the eye.”

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