This article first appeared in The Edge Financial Daily, on March 9, 2016.

KUALA LUMPUR: Felda Global Ventures Holdings Bhd (FGV), the world’s largest producer of crude palm oil (CPO), has dismissed concerns that it is embarking on too many acquisitions since its listing in 2012.

“I don’t think we are acquiring too much ... we have not acquired anything yet. It is still in discussion,” FGV group president and chief executive officer Datuk Mohd Emir Mavani Abdullah told reporters on the sidelines of the Palm and Lauric Oils Conference and Exhibition 2016 here yesterday.

He was referring to the group’s latest proposed acquisition of a 55% stake in China-based Zhong Ling Nutril-Oil Holdings Ltd for RM976.25 million, which is subject to shareholders’ approval.

Mohd Emir said he is confident the deal will get rubber-stamped as the profit margin generated by Zhong Ling, which manufactures peanut oil in China, is about 20%.

“I am very confident that shareholders will approve it if they see the number ... the profit margin is 20%. So, why not?” he asked.

FGV in its first announcement on Feb 26 stated that the proposed acquisition did not require consent from its shareholders. However, on Monday, FGV said it had been issued a written letter by Bursa Securities stating otherwise.

Mohd Emir said the proposed acquisition is in line with FGV’s plan to expand further into the downstream market, noting that Zhong Ling is one of the top 10 largest edible oil producers in the world.

“We want to tap into the edible oil business, where the margin is higher, at about 20% in China,” he added.

Mohd Emir said the proposed acquisition will also help balance FGV’s upstream and downstream businesses, where it is currently heavier on the upstream.

Post-listing, FGV has completed major brownfield acqusitions such as Pontian United Plantations Bhd at RM1.2 billion, RM2.2 billion for the remaining 51% stake in Felda Holdings Bhd and Asian Plantations Ltd for £120 million (RM703.31 million).

Since mid-2015, the group has also been in negotiations on the acquisition of a 37% stake in PT Eagle High Plantations Tbk — the third-largest plantation group listed in Jakarta — for US$680 million (RM2.79 billion). In January, its chairman Tan Sri Mohd Isa Abdul Samad was quoted as saying that the deal would be settled by this month.

The deal also involves FGV acquiring Rajawali’s sugar plantations for US$67 million.

Mohd Emir, however, declined to comment on the deal. “Once we acquire, we will let you know.”

The proposed acquisition of Zhong Ling, which is a Cayman Islands-incorporated firm, has raised eyebrows. Some quarters question the rush for FGV to propose another acquisition abroad so soon, when its plan to buy Eagle High is still pending.

On CPO export tax, which is likely to be enforced in April, Emir said it will be an impact on Malaysia’s overall plantation sector. As such, he is hopeful that the government will relook into the policy.

FGV shares closed three sen or 2.03% lower at RM1.45 yesterday, with a market capitalisation of RM5.29 billion. The counter has fallen by 68% from its initial public offering price of RM4.55 per share.