FGV seeks overseas partners for downstream expansion

KUALA LUMPUR: Felda Global Ventures Holdings Bhd (FGV) is in talks with various parties overseas, including China National Cereals, Oils and Foodstuffs Corp (Cofco), to expand its downstream business overseas.
“Cofco is one of the potential parties that we want to work with but there are a few, and not only in China. We also have (talks) in India, Pakistan and MENA (the Middle East and North Africa region) countries. We are looking for business partners,” group president and CEO Datuk Zakaria Arshad told reporters at the unveiling of the new Saji logo yesterday.
Zakaria, who was commenting on talks about Cofco eyeing a strategic stake in FGV, said that any such sale is beyond his control as it is an open market.
“Those who are interested in our shares, why not? They can always buy our shares particularly now that the price is very low. We are undervalued. With the potential of our companies, with the fruits coming in starting this year, I think we have a lot of potential,” he said.
FGV chairman Tan Sri Mohd Isa Samad said to date, the board of directors have not discussed any such strategic stake sale.
Zakaria also said that he has never had any discussions with Tradewinds Group on any stake sale. News of Tradewinds’ interest in acquiring FGV shares surfaced last year.
“As group president of this company, I never discussed with Tradewinds. It could be that they discussed with shareholders, I am not very sure. But for me, nobody from Tradewinds discussed with me. I don’t think Felda discussed it either so I think it is only rumours,” he added.
Zakaria said FGV’s strategy to penetrate the Chinese market is to work with a local partner there and sell to end users rather than going through traders like before. It hopes to conclude discussions this year, subject to the board’s approval.
“We have a few things that we need to tweak, how to do the business. Now we have our factory in China but sometimes, being a foreigner, we have limitations in terms of licensing, distribution and a lot of other things. To me, it is good to have a partnership in China so that we can grow together,” he said, adding that the facility is in the strategic location of Dongguan.
FGV’s plans to secure business partners overseas is part of its target to expand its downstream business and increase revenue from downstream products. Mohd Isa said it wants to reduce reliance on the upstream business, which contributes about 80% to its overall revenue presently.
“About 30-40% revenue from downstream would be good for FGV. This will be over a few years, maybe after 2020,” he said. FGV plans to introduce more downstream products over the next few years.