News / 22 June 2012

Initial public offering of the world’s biggest palm oil corporation threatens livelihood of 113,000 farming families

The planned initial public offering (IPO) of Malayan state-owned enterprise Felda Global Ventures Holdings (FGVH) will take place this month (28th June). It will be underwritten by Deutsche Bank, JP Morgan and Morgan Stanley; with an expected valuation of around 2.5 billion Euro this will be the second biggest IPO ever, trailing Facebook. A significant detail is that FGVH is controlled by the governing part UMNO, led by Prime Minister Mohd Najib Abdul Razak. The upcoming privatisation might be prompted by a need to generate capital for the upcoming elections.


FGVH also encompasses the world's biggest cooperative of small-scale palm oil producers, comprising over 113,000 farming families. Historically FGVH is always presented as an extraordinary success where it comes to the position of these state-organised farmers. The IPO, however, may have serious consequences for their position, land rights and other privileges, since their land is to be privatised. This situation is even more remarkable considering that these small holders, as of old, represent a significant part of the rural electorate. Investors acquiring FGVH shares are taking a large risk in the social and political sphere that is accompanied by financial risks. These risks are underexposed in the IPO prospectus.


Financial institutions that are directly or indirectly stakeholders in FGVH and it's shareholders, and that simultaneously have an ambition to make the world a better place, now face an opportunity to ensure the basis of existence of 113,000 farming families remains secure. If their supervision prevents the violation of farmers rights they will prove that such cooperation has a future. Money can achieve good things.


Read the ProFundo press release for more information, and take a look at their report for more in-depth information on the issue.


Both ENDS is a member of the Roundtable on Sustainable Palm Oil and has contributed to the design of the RSPO Dispute Settlement Facility

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