A STRING of ill-advised acquisitions caused Felda Global Ventures Holdings Bhd’s (FGV) market capitalisation to plunge to a third of its peak value.

The acquisitions included FGV Cambridge Nanosystems Ltd, which produced high-grade carbon nanotubes and graphene, which lost at least RM117 million over the past four years.

Then there was a fraudulent joint venture which resulted in a loss of RM23.6 million. The business involved FGV’s Felda Iffco Sdn Bhd and an Abu Dhabi-based food manufacturer IFFCO. Stock losses amounted to RM57 million.

Its share price has also shrunk to a quarter of FGV’s listing price due to buyouts that investors felt did not warrant the purchase prices, The Edge Weekly reported today. 

When FGV made its debut on Bursa Malaysia at the end of June 2012, it became the world’s second-largest initial public offering (IPO) for that year at US$3.1 billion (RM9.93 billion), behind Facebook.

FGV’s market capitalisation has since taken a hit, plunging at least 65% from the RM19.85 billion reported in June 2012, wiping out RM13.4 billion in shareholder value of the company.

FGV’s highest price was RM4.84 on July 6, 2012 just days after its IPO on June 28. The listing price was RM4.55. 

FGV’s lowest price was on Aug 26, 2015, when it hit RM1.17.

It closed at RM1.66 yesterday, a 75% drop in value since its listing. The drop has been gradual, accelerating in recent months. Since early May, the price dropped at least 20%. 

At the centre of the storm is Zakaria Arshad, the son of Felda settlers in Negri Sembilan, who took over as CEO from Emir Mavani Abdullah on April 1 last year.

Prior to that, Zakaria was executive vice-president since Jan 1, 2014. 

Before he becames CEO, Zakaria had already prevented several large acquisitions.

As CEO, Zakaria also blocked a proposed acquisition of 55% of edible oil producer Zhong Ling Nutril-Oil Holdings Ltd for RM976 million last April.

Pressure from Felda, which owns 34% of FGV, for Zakaria to resign began late last year after several deals began to sour. 

In the first quarter ended March 31, FGV reported a net profit of RM2.47 million on the back of RM4.32 billion in revenue.

While this was an improvement from a net loss of RM81.1 million in the same quarter a year prior, it’s a drop from profit and revenue levels of years prior. 

On Thursday, the Malaysian Anti-Corruption Commission (MACC) sent dozens of officers to seize thousands of documents from FGV’s headquarters in an eight-hour operation. Zakaria had given his statement to the MACC a day earlier. – June 10, 2017.