JPG kicked off its IPO today with an offering of up to 875 million shares, representing a 35% stake in the company, according to terms of the deal seen by Bloomberg News.
The IPO exercise for the palm oil firm is expected to be valued at RM2.1 billion.
According to data compiled by Bloomberg, the share sale is set to be the largest in Malaysia since Farm Fresh Bhd’s US$240 million (RM1.132 billion) offering in March 2022.
JPG’s parent company, Kulim Malaysia Bhd, the plantation arm of Johor Corp and the development and investment business of the Johor government, is expected to offer shares in the IPO and retain a 65% 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 focusses on specialty oils and fats,” JPG managing director Faris Adli Shukery said in a press conference after the prospectus launch.
He said Malaysia is the world’s biggest palm oil producer after Indonesia.
JPG is expected to be Johor Corp’s second unit to be publicly listed after healthcare division KPJ Healthcare Bhd, valued at RM8.56 billion.
The IPO comes as benchmark prices for palm oil traded in Kuala Lumpur disappointed analysts due to lukewarm demand.
A strong US dollar, a tepid Chinese economy, and concerns about a robust recovery in supplies from the world’s biggest growers have contributed to the weakness.
“Still, this is a good year for production, and volatility in climate conditions is likely to keep palm oil prices steady,” said Faris, adding that it might lead to better returns.
The terms of the deal showed that the company plans to use the proceeds for capital expenditure, the construction of an integrated sustainable palm oil complex, and replanting activities.
Additionally, it said the funds will go towards the repayment of bank borrowings, working capital, and estimated listing expenses.
Pricing is expected on June 24, with the listing on the Main Market of Bursa Malaysia slated for July 9.