Monday, December 26, 2016

EPF Pulls Out. Will Other Statutory Bodies Follow Suit?

Shares in Felda Global Ventures Holdings Sdn Bhd (FGV) fell 8 sen, or 4.94 percent in the morning session of trading on December 23rd, to RM1.54 with 6.98 million shares traded after the Employees Provident Fund (EPF) pulls out and no longer has any stake in FGV. 

The divestment made by EPF have certainly raised concerns over the viability investments by other statutory bodies. According to Bursa Malaysia records, EPF was allotted a 5.06 percent stake or 184,746,000 shares in FGV during its market debut on June 28, 2012. Based on the figure, its initial investment would amount to some RM840.5 million. 

A month after the IPO, FGV’s shares peaked at RM5.55 per share. By September the same year, EPF has increased its stake in the company to 6.8 percent, although FGV’s share prices was starting to slide.

Within two years, FGV’s share price halved following a drop in commodity prices and downstream losses. By March this year, Reuters data however showed that EPF only held a 3.85 percent stake in FGV and was ranked as the seventh biggest shareholder. 

The fund’s announcement on Tuesday, as such, demonstrated that there was a crisis of confidence in FGV. Previously, EPF had voiced concerns over the FGV’s investment decisions, including the abandoned proposal to acquire Indonesian palm oil firm High Eagle at a high price (exceeds 130% of the current value). 

Despite the move, in an internal statement published, EPF confirmed that the RM6.5 billion loan taken by Felda Holdings Bhd (Felda) is not in default. “Felda continues to service the loan in accordance with the agreed terms and conditions,” it said. 

EPF members are urged to verify the facts with EPF and not misled with reports or comments made over the social or online media, says the EPF statement.