FGV, Tabung Haji said to mull up to RM4b Indonesian sale

Palm oil giant FGV Holdings Bhd and the Malaysian pilgrims fund are considering selling plantation assets in Indonesia as the government-linked entities seek to improve their nancial position, people with knowledge of the matter said.

FGV and Lembaga Tabung Haji (TH) are working with an advisor to gauge potential buyer interest in Trurich Resources Sdn Bhd, which controls 42,000ha of oil palm estates in Kalimantan, according to the people.

They may seek to value Trurich at as much as US$1 billion (RM4.13 billion) including debt, the people said, asking not to be identified because the information is private.

Prime Minister Tun Dr Mahathir Mohamad has been seeking to clean up the balance sheets of statebacked companies after a global scandal erupted over the previous government’s stewardship of the 1Malaysia Development Bhd investment fund.

Since coming to power in a surprise election win last year, he has pledged to improve transparency at Malaysia’s government-linked firms and apply more scrutiny to their business dealings as part of an anti-corruption drive.

The deal would help Trurich’s owners offload assets that have been the subject of contention.

Trurich said in December it filed a police report alleging that former senior management of the pilgrims fund misled the company into overpaying for Indonesia land purchases between 2008 and 2009.

The executives haven’t publicly responded to the allegations.

FGV and TH haven’t made a final decision on whether to sell, and they may decide to keep the assets if they can’t fetch an attractive price, the people said. Representatives for FGV and TH declined to comment, while Trurich didn’t answer calls to its office seeking comment.

The Finance Ministry agreed in December to take over as much as RM19.9 billion of underperforming assets from TH, which helps Muslims save for a pilgrimage to Mecca.

The rescue will help revive the fund’s balance sheet by offloading equity investments with significant unrealised losses.

FGV swung to a net loss of RM208.8 million in the fourth quarter of last year, from a net income of RM50.4 million a year earlier.

The company has been focused on implementing new controls to bring its plantations’ performance in line with other large players in the industry, group CEO Datuk Haris Fadzilah Hassan said in February. — Bloomberg