Johor Plantations, Kulim eye biggest Malaysian IPO in two years

MALAYSIAN palm oil producer Johor Plantations Group (JPG) and a shareholder expect to raise about RM735 million (S$211 million) in an initial public offering (IPO), putting the group on track to execute the country’s biggest listing in over two years.

JPG kicked off its IPO on Wednesday (Jun 12) with an offering of up to 875 million shares, representing a 35 per cent stake in the company, according to terms of the deal seen by Bloomberg News. The IPO exercise values the palm oil firm at RM2.1 billion.

The share sale is set to be the largest in Malaysia since Farm Fresh’s US$240 million offering in March 2022, data compiled by Bloomberg show. JPG’s parent – Kulim Malaysia, the plantations arm of Johor Corp, the development and investment business of the Johor state government – is also offering shares in the IPO, and will retain a 65 per cent stake in the company after the listing.

“We intend to diversify to meet our future growth aspirations by becoming a fully integrated palm oil producer through our venture into the downstream segment, which focuses on speciality oils and fats,” JPG managing director Mohd Faris Adli Shukery said in Kuala Lumpur.

Malaysia is the world’s biggest palm oil producer after Indonesia. JPG will be Johor Corp’s second unit to be publicly listed after healthcare division KPJ Healthcare, which is valued at RM8.56 billion.

The IPO comes as benchmark prices for palm oil traded in Kuala Lumpur disappoint analysts due to lukewarm demand. A strong US dollar, a tepid Chinese economy and concerns of a robust recovery in supplies from the world’s biggest growers have contributed to the weakness. Still, prices may be supported as adverse weather lowers yields.

The company plans to use proceeds for capital expenditure including the construction of an integrated sustainable palm oil complex and replanting activities, repayment of bank borrowings, working capital and estimated listing expenses, the terms show.

Pricing is expected on Jun 24, with listing in Kuala Lumpur slated for Jul 9. BLOOMBERG